Nearly 55 per cent of the first time buyers opted for second-hand cars in 2020, PumPumPum figures report. Yes, pre-owned vehicles have a huge demand in India, even bigger than new models, due to various reasons. Used cars are relatively inexpensive compared to their brand-new counterparts, and the depreciation rates are also on the lower side.
Having said that, purchasing a car – whether new or used, is not a small decision. You have to arrange finances after selecting your preferred model and seal the deal. There are various means through which you can buy a used car like your own savings, a second-hand car loan, organised dealers and more.
Luckily, here’s a guide to help you choose the best option out of these different ways to collect finances for a second-hand car. Read on!
Use your savings/cash
It is an obvious way to use your savings to pay for the entire cost of the used car. However, it is only practical if you have extra cash sitting idle into a savings account. You should make sure this car shopping doesn’t eat away your savings buffer. Let’s face it; you need liquid cash to pay for other expenses as well!
Avail of a used car loan
The smartest way to arrange finances for a second-hand car is to apply for used car finance. Nowadays, numerous lenders in the market provide car loans for buying pre-owned vehicles at reasonable used car loan interest rates. This option is well-suited if you are facing a shortage of funds or don’t want to dig up your savings.
It is worth noting that the age and model of the used car are considered in determining if it is creditable or not. The older the vehicle is, the tougher is it to get financing via loan. Ideally, the sum of the loan tenure and the car’s age must not exceed eight-ten years. The lenders also check your used car loan eligibility by looking at your credit history and CIBIL score.
Approach an organised dealer
The second-hand car market is booming, and people are selling their cars frequently. Thankfully, the market has a host of trustworthy, organised dealers. These merchants source cars, run a thorough inspection on them and offer them for sale.
If you want to collect funds for your purchase, do it through an organised dealer. Most lenders are more than happy to provide financing through organised dealers at attractive used car loan interest rate. This is because the lender’s risk is reduced significantly by the prior verification and caution of the dealer. They even handle the documentation and check whether the car is accident-free or not.
Parting thoughts
Collecting finances for your second-hand car purchase can seem daunting at times. But, with proper research on financing options and their accessibility, it can be effortless. Do carefully compare the lenders and their offerings when applying for a used car loan. Moreover, utilise a used car loan EMI calculator to get a clearer idea of your loan tenure and EMI payouts.
