Opting for a used car instead of a new one is a choice that many people may find fancier as the cost is low and you get the same comfort.
In India, the pre-owned Vehicle market is big and offers a variety of options for someone interested in getting it.
If you want to own a luxury vehicle, you can get your hands on that segment of car within a budget. Often this segment car or segment below this comes with a price tag that requires financing.
In this guide, we will provide you ins and outs of buying a pre-owned car, how to apply for a used car loan, and much more.
But first, let’s find out about the pros and cons of getting a used car.
Table of Contents
Pros of Getting a Used Car
Getting a used car may not be on your priority list but there are a lot of benefits of getting a used car. The following are the pros of getting a used car-
- A used car is cheaper than a car that is fresh out of the showroom, especially after adding taxes and other accessories, The cost of a vehicle goes up which increases your liability hence, a used car can be a good option if you can buy it for cheaper.
- You can purchase a used car in the luxury segment within the budget, some used cars can be bought for dirt cheap prices which makes them worth a lot more
- You can negotiate with the previous owner or dealer for the price of the used car but you cannot do that with a new car and something for high-demand car, you may have to pay extra
- There can be a waiting period for getting a car especially popular cars which may add the time boundness but, with a used car you can easily get the car within a day or two
- Used can do not come with any registration fee or do not have any taxes to be paid for the purchase hence, making the purchase affordable and exact
- You also have an option to finance your car purchase for the used car
Cons of Getting a Used Car
Not every great thing is perfect so does get a used car. There are some concerns that you should consider before getting a used car-
- Used cars are more prone to repair adding additional cost of repair and maintenance to the overall cost of the car over the years
- The interest rate offered on the used car by the banks is higher than the new car finance interest rate
- Purchasing a new car offers you an emotional satisfaction and feeling but, that you may not get with the used car
Used Car Buying Guidelines
Now that you know the used car pros and cons and based on this, you might have made your decision, It is important for you to now have a guideline alongside which you can purchase your used car.
There are some things that you’ll have to keep in mind while purchasing the car otherwise there are many dealers and scammers in the market who may sell you a defective car or a stolen car.
The following are some of the important things that you’ll have to check before buying a used car-
Check the Vehicle Papers
The very first step that you’ll have to check is the vehicle papers, check the RC, insurance, and other important papers of the vehicle. This is an important thing that will help you in legally changing the vehicle’s ownership in your name.
In RC, you’ll have to check the number of owners of the car and then the hypnotization from the bank. If there is hypnotization from the bank then you need NOC from the bank which has to be submitted while transferring the RC.
In the insurance document, you’ll have to check whether there is any claim on the vehicle or not, Best Buy is the one that does not have any claim in the past as it confirms that there had been no accidents on the car.
This step is important for you to check while purchasing a used car. You need to have a proper history of the vehicle, like the number of KM driven, service record, tire condition, and physical inspection of the vehicle.
Whatever you see should also be reflected on the papers meaning if a vehicle is driven 50,000 KM then the tire of the vehicle should be worn out like a 50,000 Km done vehicle, If that is not the case then either the tires are changed or the meter is tampered which makes.
If the tires are changed, you must ask for the reasons and further examine the vehicle for other signs for any mismatches.
Take a Drive Test
Now, that the physical verification is done, you’ll have to take a driving test and check for vitals like Brake, clutch, accelerator, suspension, and electronics of the vehicle.
After driving, make sure you open the hood and listen to any cranking noise coming out of the engine, inspect the oil. One more inspection that you’ll have to do is to look at the screws of the engine, you have to look for any sign of wear and tear. If you find that sign then the engine has been opened which makes the car risky for purchase.
Traffic Challan and Insurance check
You’ll again have to check for the validity of the insurance and the cost of renewal has to be calculated beforehand to ensure, you do not have to pay a lot on the insurance after ending the insurance, if possible get a new insurance.
Now, before buying, you’ll also have to check for any pending challans that the vehicle may have. Pending Vehicle challans block the transfer of the vehicle’s RC and this may make the purchasing process of the car time-consuming. You can find about the pending challan from the official website of the state’s traffic department.
How to Apply for a Used Car Loan?
Getting a car from the dealer will automate this entire process, and you only have to submit your papers to the dealer and the dealer will facilitate financing, as well as the transfer of the papers. The following are the steps that you’ll have to take to apply for a used car loan-
- Visit the nearest bank where you want to get the loan from and ask the bank representative for a used car loan. You also need to ensure that the bank has a used car loan
- Now, fill out the loan application form with details like name, address, and other important details followed by attaching the documents mentioned below
- After that, you’ll have to negotiate the interest rate and complete the process by submitting the documents
- The vehicle will be then inspected by an inspector for condition and based on that the valuation of the vehicle will be calculated
- Now, you’ll be intimated about the detailed used car loan application in your Email and call
- You will have to confirm and agree to the terms and conditions to get the car loan for the purchase
- After confirming, the loan amount will be transferred to the recipient and you’ll be able to initiate the RC Transfer process
Documents Required for Applying for Used Car Loan
The following are the documents that you’ll have to provide while getting a used car loan-
- Application form
- Passport-size photographs
- Car valuation report
Identity Proof: (Anyone)
- Aadhaar Card
- Driving License
- Voter’s ID
- PAN Card
Address Proof: (Anyone)
- Voter’s ID
- LIC Policy
- Electricity Bill
- Aadhaar Card
- Driving License
- Ration Card
Income Proof: (Anyone)
- Profit and loss account
- Balance sheet
- Audit sheet
- Form 16
- Salary slip
- Bank statements
Eligibility criteria may vary from lender to lender, but they often consider factors such as your credit score, age, income stability, and employment history.
The loan amount you can borrow depends on factors like the car’s value, your creditworthiness, and the lender’s policies. Lenders typically lend a percentage of the car’s value, often around 80-90%.
Loan tenures for used car loans usually range from 2 to 7 years depending on the loan amount. If the loan amount is higher for luxury segment cars then you can expect 7 years of loan tenure, but you always have the option to keep the tenure in between these numbers.
Yes, you need to pay a down payment for a used car loan as the used car loan provides 80-90% of the vehicle’s value and 10-20% value of the car must be paid as a down payment.
Yes, most lenders allow you to prepay or foreclose the loan before the end of the term. However, they might charge a prepayment penalty or fee, so it’s important to clarify this with the lender before taking the loan.