Used car loan a good option but be ready to face higher interest rates

The first thing that occupies the dream of many in India is the ownership of car, isn’t it? We all think of owning the car some day or the other. We then start making all the savings to ensure the finances are available to buy the car at some stage of our lives. Some manage to do, some do not. For those falling in the latter category, there is an option of buying the pre-owned car or used car, whatever you would like to call it. You need not to get disappointed with the used car as you can get a better deal on such vehicles. Plus, it can be huge relief to your pocket as used cars can be bought at a significantly lower price.

The used car market has become much larger than the new car counterparts. Over 3 million used cars are sold compared to 2.2 million new cars in India. After knowing the figure in favour of the used car, you must now be thinking and planning to buy it, right. So, we have listed out certain advantages that will encourage you to buy used cars.

Advantages

Get used car at the price of new models

You can give your pocket a big relief by buying the used car from the higher segment at a much lesser price than the new car. Sedans lose up to 40% of their original cost in the first year itself. You can buy a year old Skoda Octavia RS, whose new models are available for approximately Rs 15 lacs, at a much lesser price of around Rs 10 lacs. Further, a old model of Honda Accord can be available at the cost of new Maruti Swift, as well as a 3-4 year old Mitsubishi Lancer, Honda City at the price closer to a new Alto.

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Reliability

Recognizing the need to retain customers, car makers are re-engineering their design and using advanced technology to ensure reliability and durability of the vehicles. Japanese car makers are rolling out cars with reliable performance for up to 2,00,000 km, if maintained properly.

Opt for certified pre-owned cars

Opt for certified pre-owned cars as these go through comprehensive inspection and change of parts in order to make users feel the experience of a new car. Moreover, some dealers also improve the cosmetic function of pre-owned cars.

Chance to avail extended warranties

You can take advantage of the extended warranties if you are looking to buy 1-2 year old car. These warranties, similar to the one provided for new cars, cover all the components of the used car. And there are warranties that cover only the transmission and engine.

Financing options

You can use suitable financing options to buy the used car of your choice. Loan can be taken to buy used cars, but make sure the model is used for less than 5 years. Else you will not get loan and have to pay the full price to get the possession of the used car you opt for.

But before you get excited to buy the used car, make sure you read some disadvantages to choose the right vehicle for you.
Disadvantages

Deal with higher interest rates

Interest rates for pre-owned cars are usually much higher than the new ones. Interest rate on loan for used cars come in the range of 15-20%, much higher than 9.5-15% for new ones. Higher interest rate means higher interest outgo. Plus, the repayment period for used cars is around 3 years, much lesser than 7 years in the case of new cars.

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Maintenance

Often people overlook the maintenance cost of a pre-owned car, which can be much more than in the case of new one.

Accidental history of cars

Used cars may have been damaged by negligence, accidents, floods, etc. And to make it worse, the repairs may not have been done properly, leaving you in a tight spot when you go to buy the used car. So, you need to be wary of such things. Also, checking the history of car can be a cumbersome and time-consuming process.

Requires exhaustive research

You will have to do an exhaustive research to find the pre-owned car of your choice and budget. Make sure you thoroughly scan a series of advertisements and visit as many dealerships as possible before you buy the used car. The process is much more complicated than the one when you visit the showroom and fill the order form for a new car.

Personal Loan Interest Rates December 2017
Bajaj Finserv 10.99% - 16.00%
Fullerton India 14.00% - 33.00%
HDFC Bank 10.99% - 20.70%
ICICI Bank 10.99% - 18.40%
IndusInd Bank 12.99% - 20.00%
Kotak Bank 10.99% - 17.99%
RBL 14.00% - 18.00%
Standard Chartered Bank 10.99% - 14.49%
Tata Capital 11.49% - 18.00%
Home Loan Interest Rates December 2017
State Bank of India/SBI 8.30% - 8.60%
HDFC 8.35% - 8.95%
Bank of Baroda 8.30% - 9.30%
LIC Housing 8.35% - 8.70%
PNB Housing Finance 8.35% - 8.70%
ICICI Bank 8.35% - 8.85%
Axis Bank 8.35% - 8.75%
Citibank 8.60% - 9.35%
Indiabulls Housing Finance Limited 8.35% - 8.55%
Kotak Bank 8.35%
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