CAR LOAN

CAR LOAN FACTS

Know these 5 things before taking a “Loan to buy a second-hand car”

In today's stressful world, lifestyle has completely changed. The tools required for traveling are now modern. The use of technology has increased. In the early days, the four-wheeler was considered only as a luxury item. But now the situation has changed. Everyone now wants a four-wheeler as a status symbol. Moreover, the view of society has also changed due to the four-wheeler.

CARS AS A MIRROR OR AN IDENTITY

People also look at cars as a mirror or an identity. A car may be necessary if there are more than three members in the household. In the past two years, everyone has faced economic recession due to the Corona epidemic. As a result, car purchases have declined in the last two years. But now the flow of buying cars has increased due to the smooth running of life. In this, consumers are giving special emphasis on buying old used cars.

SECOND-HAND CARS

There are many online applications where second-hand cars are widely available. Not only this, now loan concessions are available while buying a second-hand car. Therefore, consumers are buying second-hand cars in large numbers. From today's article, what things should be taken care of while buying a second-hand car? We will learn about it.

DEFINITION OF SECOND-HAND CAR

If a car is used by one or more owners then we call it a second-hand car.

Secondhand cars are generally in good condition. According to a report by crisil.com, about 42 lakh Indians are driving second-hand cars. Secondhand car sales have increased by 115% during the lockdown.

Five things to consider before taking a loan to buy a second-hand car

1. Make a financial plan:

A 30 lakh BMW car can be bought for half or a third of the price of a new car. Although this sounds easy, it requires good money planning. We can buy second-hand cars from popular companies at low prices.

Take a loan to buy a secondhand car keeping in mind your monthly expenses, and children's education expenses, along with other loan installments. Otherwise, we may get into trouble due to an increase in financial burden.

2. Arrange a down payment for a car loan:

While buying a second-hand car, the loan is always sanctioned keeping in mind the condition of the car. Various things are checked for this. The lending situation varies from bank to bank.

The loan-sanctioned amount is only 70-80% of the cost of the car. The remaining amount has to be paid by the borrower from his own pocket.

The issue of the high maintenance cost of second-hand cars is also taken into consideration by the bank. Therefore, the borrower should arrange the down payment while sanctioning the loan amount.

3. Procedure for submission of documents:

The paperwork process while buying a second-hand car is complex and complicated. The main reason for this is that it takes a long time from the purchase of the car to its registration. Apart from this, banks take care of everything until the car loan is approved.

If the person from whom we are buying the car does not show the registration certificate or insurance documents, the bank rejects the loan outright. In such a case, the proper completion of the documents must be done by the borrower to the bank.

4. Interest on the loan amount and loan repayment period:

The interest rate is at least 14% to 20% if you take a loan while buying a secondhand car. An average interest rate of 8-10% is charged while buying a new car.

As the price of a second-hand car is depreciating, the loan is sanctioned according to its value. In such a case, if a loan is taken, the loan has to be repaid within a maximum period of 5 years. This rule can seem overwhelming when buying a second-hand car.

You should also consider whether to buy a cheaper new car instead of buying a more expensive second-hand car.

5. Gold loan:

The best option when buying a second-hand car is to take a gold loan. Gold loans are secured by collateralized gold. It also has lower interest rates compared to other loans. Moreover, there is no requirement for oppressive documents while pledging gold.

If you have enough gold available, take a loan by pledging it to the bank and use this gold collateral loan to buy a secondhand car.

6. Considering other financial options for buying a car:

While buying a second-hand car, we face many difficulties getting a loan. In that case, you can also take a personal loan. The tenure of a personal loan is generally longer than that of a car loan.

You can easily get an amount equal to the cost of the car through a personal loan. However, the CIBIL score is given special importance in this. However, it is very difficult to get a loan if you have a low CIBIL score.

CONCLUSION

While buying a second-hand car, you should pay attention to the finer details. Many times, if you take a loan for a secondhand car, you have to pay a huge amount of interest. So, you should study all the options properly and buy a second-hand car.

Consider whether buying a car is a need or a hobby and make the right decision.