Buying Used Cars on Loan: Things You Should Know

According to a survey conducted in 2017, the pre-owned car market in India comprises of about 3.5 million units, making up for almost 1.2 times the volume of new cars sold. Buying a used luxury vehicle is actually a good idea. If you have your heart set on an Audi A3, for instance, the price of a used A3 in Delhi NCR will be much more affordable than that of a new one. However, make sure to only buy pre-owned vehicles from authorised dealers to ensure a satisfying experience.

It has also been found that despite this sizeable number of used cars sold, only 15% of these purchases used financing options. In case you are looking to buy a second-hand Audi car with a loan, here are some facts that might prove helpful.

Facts to Know about Used Car Financing

1. Interest Rates: When you are seeking loans for financing your used car, the interest rates may vary from 9.15% to 15%. PSU banks offer lower rates as compared to private lenders. Sometimes, seeking a personal loan may be a better option for borrowers with a higher credit score and a healthy annual income. You need to weigh both options and decide which one is better for you. Whenever you seek a loan, always go with a reputed institution.
2. The Loan Amount: In most cases, you will be able to get a loan for 70% to 90% of the total valuation of the used car. The valuation will depend on the declared value of the insurance company or the IDV. So, if your car costs Rs. 5 lakhs and the valuation of your car is about Rs. 4 lakhs, you can get a maximum loan of Rs. 3.2 lakhs. The balance Rs. 1.8 lakhs needs to be financed by you, which will be the down payment.
3. The Loan Tenure: Normally, all used car loans offer a tenure of up to 5 years. However, some leading institutions also stick to the "payback within 10 years of the original invoice" rule. So, if your car is already 6 years old, you can only avail a loan for up to 4 years and not more. You will need to find out about all these terms and conditions before settling on a finance option to check if it is comfortable for you.
4. Disbursal Process: The disbursal for a used car loan will take anywhere between one week to 10 days.

So, when you ask the dealership about the price of Audi A3 in Delhi NCR, you can also enquire about the financing options you can look at.