Congratulations! For successfully obtaining drivers license. Now you can bring the beast right in front of your door, in your name. But wait! You just learned the car. You never went on a long drive all alone. Will you be comfortable to drive in the traffic? Probably you need more refinement in your driving skills. You can try your hands on a second hand car with model of your choice. Get all the required confidence before you are the new Hamilton or Rosberg!
Used car market: Indian scenario
The market for second hand cars is booming. As per a report published in ET, India is currently showing a growth rate of about 15% per year which seems to double in the next five years. Also, the organized sector is slowly penetrating into this segment which makes the pre-owned car market more attractive and reliable. There are several well known organized players in this business such as True Value (Maruti Suzuki), First Choice (Mahindra), Assured (Tata Motors) and HPromise (Hyundai) to name a few.
Getting a loan for Used Car
A large number of banks and NBFC are offering used car loans. The average loan granted is generally 70% of the car cost though in few cases it may also be about 85%. The rate of interest is generally higher than those charged on the new cars and comes to about 11-17%. Typical repayment period lasts till 7 years which includes the used life of the car (Example- If the car was bought in 2013 and is sold in 2015, the loan tenure would be 5 years since car is already used for 2 years). The loan is processed in about 8-10 days.
The loans are granted based on the age, model and the number of kilometers car ran. If the car model is phase out or is accident prone due to faulty spare parts, improper maintenance of poor response from public, the loan is likely to be rejected. The bank personnel will thoroughly inspect the quality and submit a report to the lender after which the loan is granted (or denied). Newer and more popular the model, better are the chances for loan getting passed. Buying used car from an organized dealer is more favorable due to more reliance on the car quality.
Pre-owned car loan methods
Conventional method
This includes loans taken from a bank or NBFC. The loan is secured or unsecured. In secured loans, the ownership is not transferred until the payment is complete and vice-versa for secured loans.
Personal Contract Hire (PCH)
Here the car is rented for a certain duration for which you pay monthly installments till lease expires. The ownership always remains with the dealer who has leased the car.
Personal Contact Purchase (PCP)
In this method, an initial deposit (about 10% of the total amount) is paid after which monthly installments are paid. In the end, the remaining amount is paid called balloon payment and buyer gets the car ownership.
Doors are many to lead you to a way. You just need to tap the right door to work it out your way!
Recommended Read :
- How to Apply for a Car Loan?
- What is the Car Loan Eligibility?
- Car Loan Eligibility - Important Points
- 7 Factors That Make Car Loan Simple
- Advantages of Car Loan
- Pros and Cons - Car Loan
- Smart ways to Reduce Car Loan EMI
- How to get Loan for a Used Car?
- Why Used Car Loan Interests Higher than New Car Loan?
- Car Loans in India
Owning a car is a dream of many but not everyone can afford a brand new car. Purchasing a new car can bring some people from hand to mouth. Hence, a number f people prefer buying a second hand/ pre-owned car instead of a new one. You can get a loan for a pre-owned car upto 80 to 90 percent of its value. The basic process and requirements of most banks is similar with flexible repayment options. Take a pre-owned car and travel in the comfort of your own car!
Owning a car is still a dream for many middle class families in India. But getting a second hand car is a step forward in realising one’s dream. The loan granted is even attractive with the minus point only being the interest rate. The reputed organized sector like Maruti, Hyundai,Tata Motors and Mahindra coming into this field one is more assured of the quality.
The time when I passed the drivers licence exam and then getting the first car has probably been one of the most exciting periods of my life. The feeling of freedom, however, was obtained with a little help from a bank and my loan for the second-hand car. The article brings back some memories.
For those people who come under low income category or middle class and lower class people, this loan is the best option as buying a new car is not fun for them. Mostly, such people afford pre-owned cars and borrowing a loan for it can be double benefit for them.
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