Can you easily get second hand car finance?
The purchasing of new cars have slowed down in the recent past but the purchase of pre-owned cars has grown in the past few years and the market seems to grow further in coming years. There are multiple factors that have contributed towards slowing down of the demand for new cars. One of the major reasons is the cyclical slowdown in auto sales in the election years and also the gradual consumption slowdown in the economy.
As per the experts, because of the slowdown in new car sales, the demand for pre-owned cars will increase. One of the major reasons behind getting a used car is getting good value for money. In general, the average ownership period of a car has come down to about 3 to 5 years compared to 8 to 10 years a few years back. This means that a 3-year-old car is as good as a new vehicle so the buyers are encouraged to go for used cars instead of buying a new one.
Buying a pre-owned car offers value for money
- The used car market is bigger than the new car market.
- Buyers prefer younger cars but sellers like to sell after 5 years.
- Pre-owned cars are affordable and can be easily bought using second hand car finance.
Financing used car
Did you know that you can get a car loan to buy a second-hand or pre-owned car? Yes, you are right. You can easily fund the amount of a used car by availing a loan. But there are a few things that you need to check before you get such a loan.
- Visit Lender
You should visit the lender either online or offline with whom you want to apply for the pre-owned car loan. Also, in order to get a better rate of interest, you should do proper research and then apply for the loan. You can also check the deals on wide range of platforms and pick the best-suited option.
- New car loan Vs used car loan
Used car loans come with a high rate of interest and lower loan-to-value (LTV) ratios than loans for purchasing new cars. The amount of loan for the used cars depends upon the valuation of the car by the lender and the loan tenure of used car loans goes up to 5 years. Here, the final tenure is sanctioned by the agent of the car. You need to know the difference between availing new car loan and a used car loan.
- Finalizing the pre-owned car
You need to discuss with your lender about how much loan amount you are eligible for, what is the rate of interest, processing fee, the tenure you want, and your monthly installments. You should also check with the lender if there are any prepayment charges or not.
- Submitting documents
You need to submit all your documents to the lender so that he can process your loan application. The documents that you need to provide the lender include your photo ID, application form with passport-sized photo, and residential proof.
- Taking possession of your car
After the approval of the loan, the seller will receive the money in his or her bank account. You can even pay the down payment amount to the seller and take possession of the pre-owned car.
Things you must consider to get the approval on second hand car finance
- At the time of buying a pre-owned car, you need to check that all the original documents are in place with the seller.
- You should check if any e-cheque is lying pending against the seller.
- In case you want to buy an inter-state car then you need to negotiate with the car seller to arrange for NOC from the state registration.
- If the collateral of the lender is mentioned in the RC or the Car Registration Certificate, then the seller will repay the loan and get a No Objection Certificate or NOC from his banker and share the same with you.
There is no maximum time period for which you can finance a used car but there are some guidelines that some of the major banks follow. Every lender has a different policy so you should properly check the terms before option for second hand car finance.