What to watch out for when taking a pre-owned car loan
Sumit Garg, co-founder and managing director, Luxury Ride, a showroom in India for second hand luxury cars, says that due to covid-19, many buyers were opting to buy pre-owned cars instead of new ones. They feel safer using their own vehicle to commute.
Hence, before deciding to purchase a pre-owned car, you must look at some crucial steps, especially around the financing and documentation process.
Select the vehicle type, make and model: The first step is to classify the type of car you would like to purchase. Amit Kumar, head, OLX Autos India, said, “If you are a first-time buyer of a pre-owned car, then an entry-level car would be an apt choice for you, especially if you have a tight budget. The ownership period of cars has declined from 7 years to 4 years; hence if you are buying a pre-owned car for the first time or plan to do so in the future, then you could start with an entry-level car and gradually upgrade to a larger car in a few years.” While budgeting for a pre-owned car, one must stick to an appropriate range, including the purchase price and annual maintenance cost.
“There are many online platforms available to compare cars within your budget to get a good deal. As a standard rule, you should be willing to extend your budget by up to 10% if you get a car which is priced higher but meets your needs,” said Kumar. Keep a close eye on the age and condition of the car you intend to purchase, as banks may not be willing to provide a loan if the vehicle is more than 2-3 years old. “Factors like the number of kilometres driven, the user profile, the place of usage, accidents or modifications done on the vehicle, etc., must be checked. One can always ask for the service history and odometer records while purchasing a pre-owned luxury car,” said Garg.
Once you choose which car you want to buy, look for a lender that can help finance your pre-owned vehicle. “Companies that deal in selling pre-owned vehicles usually have partnerships with various fintechs and banks to assist buyers in quick financing,” said Garg.
While deciding to get a loan sanctioned on a pre-owned car, you should try to pay a large part of the cost yourself as it can save a significant amount of money compared with availing of a pre-owned car loan on the total purchase value of the car.
