The Loan Option
Several banks offer loans for buying used cars. Are these loans different from loans for buying a new car? Yes, there are some differences, as you will see in the points below: • Margin component (is higher for used cars) Interest rate (is higher) Maximum loan component (is higher) Age of the car (cannot be more than five years old) Road-worthiness registered garage In some banks, the repayment period runs concurrently with age of the car Loan amount and approval in the case of used cars are subject to the age, model and condition of the car (unlike in the case of new car loans). Interest rates tend to be three per cent to five per cent higher than new car loans. Also, the loan amount will generally be 70 per cent to 90 per cent of the car value. So, these are factors the prospective loan borrower will have to keep in mind. • • • • • certificate from
Automobile Companies Are in It for Good
a Today, many automobile companies have entered the used cars market and deal in buying/selling such cars. Some leading names are Mahindra First Choice Wheels and Maruti True Value. They buy used cars, refurbish them, and also conduct quality tests to determine and fix the selling cost. Further, they can facilitate the financing aspect as they have tie-ups with banks (just like tie-ups with banks for new cars of a particular brand). Most retailers also add benefits like service packages and warranties.
Insurance Cover on Life of Used-Car Owner under Bank Finance
This is seldom included in the bank’s brochure on car finance, but the importance of this element cannot be ignored.