Even today, purchasing a car is seen as a status symbol in India. But because of the Pandemic the prices of new cars have skyrocketed and the supply chain issues have also not helped solve this problem. Because of this the middle class are not able to afford brand new cars. This has now led to the standardization of the used car industry.
Even though buying a second hand car is not seen as a socially acceptable norm we are here to tell you that buying a used car might be one of the best decisions a person can make because of many factors such as the high repair cost of a new car, the extra depreciation and the lower stress that comes with owning a Second hand car.
To help you with the purchase of your second hand car we here are going to help you on how you can obtain a second hand car loan which will make your purchasing decision much easier and hassle free.
The following are the features of a second hand car loan.
- Now because of the Internet, it has become very easy to apply for second hand car loan online, and it has also become a very hassle-free process which requires minimum documents to be submitted and does not require the consumer to go to various financial institutions.
- Since the value of a second hand car is lower than the value of a Brand-new car. The total loan amount and the value of EMI’s that a person needs to pay every month is lower, which makes it a no brainer choice
- The used car loan interest rate ranges anywhere from 10% to 17% and the loan repayment period goes up to seven years, but it is generally advisable to apply for a loan for a shorter tenure as increasing the loan tenure tends to increase the interest which needs to be paid to the financing institution.
The following are some advantages and disadvantages of a second hand car loan.
Advantages
- Second hand car loans are easier to obtain as there are very few documents that are required to be submitted.
- Interest rates on these loans are very flexible.
- Since the value of a second hand car is lower than a brand-new car. The total amount of loan to be repaid to the banks, including the interest rate is low, which makes the monthly EMI lower as compared to purchasing a brand new car.
- If you have a good credit score you can get a lower interest rate on your loans.
Disadvantages
- A good credit score is required to obtain a loan from a recognized financial institution.
- If the second hand car is of an older model, the interest rates might be high.
Conclusion
Hence, we can say that it is advisable for a person to get a second hand car loan if the car is not more than three to five years old, as it will increase the interest rate of the loan if the car is older and the person also needs to do his due diligence while buying a used car to see that he purchases a car from a reputed dealer and the car is in a good condition and he also needs to ensure that all the documents of the used car are also present such as proper registration and licenses. He also needs to ensure that the previous owner has paid all the required taxes.
