Can I Get A Car Loan For A Second-Hand Car?

The popularity of second-hand cars has increased significantly in recent years. The advent of reliable reselling agencies for cars, improved car quality in India, and growing societal acceptance for pre-owned cars have contributed majorly to the increasing market for second-hand cars in India.Moreover, the presence of established names into such market has attracted a large number of buyers to purchase pre-owned cars.

A few years ago, people used to be skeptical of buying pre-owned cars due to their doubt regarding ownership of the vehicle. However, in today’s time, potential buyerscan use Govt. services like VAAHAN to know the registered owner of the vehicle while making the purchase.

Some of the benefits of buying a pre-owned car are as follows:

  • It is pocket-friendly. A second-hand car will require less financing and thus, if you opt to avail a loan, you’ll have smaller monthly installments to repay.
  • The insurance cost of a pre-owned car is lesser and the prospect of depreciation is also less as compared to new cars. Therefore, you can retain its original value when you wish to resell it in the future.
  • A lot of financial institutions provide second-hand car loans with customer friendly features. Financing the purchase of a pre-owned car isn’t a tedious task.

Therefore, if you are looking forward to buying a second-hand car for yourself, a second-hand car loan can be a great financing option. With prominent banks and other financial institutions, a second-hand car loan can be availed easily by undertaking a few registration formalities. Instead of liquidating your saving to purchase a vehicle, availing a second-hand car loan is a better financing option. Some of the other benefits of car loans for second-hand cars are mentioned below:

Lower interest rate than Personal Loans – Used car loans are secured loans and thus, the interest rates levied on them are lower than regular personal loans.

Reliable Security Check performed by the Financier – The financial institution undertakes a detailed background check for the registration documents of the vehicle. This ensures that there is a genuine transfer of ownership of the vehicle in your name. The financial institution makes sure that the registration documents are completely authentic and there is no fraudulent transaction while transferring the ownership of the vehicle.

Flexible Repayment Tenure – Most financial institutions provide the option of flexible repayment tenure in case of used car loans. Therefore, you can structure your EMIs as per your convenience. You can also calculate your EMI amount with the help of online EMI calculator. This will allow you to plan your monthly budget accordingly.

Higher Loan-To-Value (LTV) Ratio–  The LTV ratio is higher in case of used car loans. Several banks and financial institutions may also provide you financial assistance up to 100% of your second-hand car. The loan amount will depend upon your current monthly income and your expected repayment capacity in the future.

Lastly, before availing a second-hand car loan, make sure to compare various deals offered to you different financial institution. This will allow you to settle for a loan that best suits your needs.