Auto loans for used or second hand cars in India: What you should know?
It's not always that you would like to buy a brand new car or a vehicle. There are times when you realise that you would not drive much and that a used or second hand car would do.
Loans today are easily available for used cars, depending on the age of the car.
If you have seen a 10 year old car and are expecting loan for the same, forget it. Just do not keep chasing the bankers as you are unlikely to get a car or auto loan approved for the purpose, if the age of the vehicle is over 4-5 years.
Important things to know before you take an auto or car loan in India:
a) Interest Rates on Used Cars Are Higher
Interest rates are generally higher in the case of used cars. It's almost impossible to say how high these rates would be. It would most certainly depend on the financier and the age of the vehicle. Older the vehicle higher would be the applicable interest rate.
You can expect interest rates to be higher by at least three per centage points on an average.
b) Banks Offer Cheaper Rates for Used Auto and Vehicle Loans in India
If you have to choose between an NBFC and a bank, go in for the bank, because the interest rate would be certainly cheaper. In fact, if you are able to rope in a government owned bank, you might get the loan at an even cheaper rate.
c) Age of the Car Important
The age of the car or the vehicle is extremely important. Older the car, the higher the interest rates. In fact, older the car lesser the funding as well.
d) Financing Through a Reputed Dealer is the Better Option
You may have heard of certified cars. Almost every top manufacturer certifies used cars. For example, Maruti has True Value, where Maruti engineers certify the health of the car. They check several key points to determine the health of the car.
Banks may favour buying from a reputed second hand vendor like Maruti True Value, which would to some extent guarantee the value of the car.
e) Loans For a Lesser Period
If banks grant an auto loan for a maximum of 5 years, it would be almost certain that you would not get the same tenure for a used car.
Conclusion
If you are going for a second hand car make sure that the car is not very old. This would save on interest rates and help in easy approval of the loan.
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