In India, during the last few years, the used car segment has experienced tremendous growth. In fact, the used car market size is 1.3 times bigger than the new car market. One of the major factors responsible for this is the availability of finance for pre-owned cars in India. Also, with the revision of the GST rates on used cars from 28% to 12 – 18% has contributed to the growth of this market in the country. It is estimated that the used car market would be worth an astounding $ 25 billion by 2023. Nevertheless, there are certain factors like high used cars loan interest rate, standardized dealership experience and fair price experience that might hamper the growth of this market in India.
A lot of people are showing interest in buying used cars. If you are planning to buy a used car and looking out for taking loans from the various lenders available in the market. Here are a few tips that will make it easier for you in getting a better interest rate on the used cars loans.
Tip 1: Choose Your Lender Wisely
There are various lenders available in the market giving loans for used cars. Make sure that you do thorough research before finalizing a lender. Refrain from taking a loan from a lender because you are having a good banking relationship. You can even check with individuals in your network who have availed of used car loans and get their feedback on which lender to choose. You can also depend on multiple reviews given by independent portals and influencers. The second-hand car loan rates depend on how old the car is, it varies from 10.50% and 18% per annum.
Tip 2: Enquire About the Necessary Information
After you have chosen your lender wisely and carefully, do make sure to ask about the foreclosure charges, stamp duty, part-prepayment charges, processing fee and other administrative cost involved. In India, most of the lenders do not allow the foreclosure of a loan within the time period of six months of taking the loan.
Tip 3: Compare Loan Rates
Use reliable online aggregators to compare second hand car loan rates. In India, the interest rate on the loan for a new car is lower than the interest rate on the second hand cars. The lenders may offer up to 80-85% of the total value of the used cars. It is important to ascertain the loan to value ratio offered by lenders as this would determine the overall value of the loan that you would receive.
Tip 4: Used Car Loan EMI Calculator
You will repay your loan to the lender through monthly EMIs. There are used car loan EMI calculator that help you in calculating the monthly EMI you have to pay to the lender. Be very cautious while calculating this as these EMIs should not burn a hole in your pocket and disturb your monthly budget. If at any point in time, you feel that the EMI is too much for you to pay, then you may want to postpone the idea of buying a second-hand car