Car Loan
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The used car market has become a fertile place with varied options. Thanks to the frequent car launches, model updates and easy access to financing. Although Indians love cars, quite a lot of them choose to avoid buying new cars because of its hefty price tags and quick depreciation. But the love for cars pushes them to look at the other options available to them in used hand cars. Therefore, it makes perfect sense to those people who love a good bargain and a good car to apply for a second-hand car loan to buy a second-hand car.
7 Top Reasons to Buy a Used Car
Depreciates at a slower rate
If you think buying a new car is an investment, you are sadly mistaken. A new car starts depreciating the moment you drive it off the dealership. The depreciation continues, and the car loses half its value within three years of purchase. Although the new car comes with some perks such as warranties, free servicing for a year, and low financing, it cannot withstand the law of depreciation. On the other hand, a used car depreciates at a slower pace as compared to a brand-new car. When you are buying a used car, you are already purchasing it at its depreciated price.
Offers good variety within your budget
Every year, quite a number of new car models are launched, and a few cars undergo updates. There is quite a lot of options available in the new car market, but not quite as much as what options the used car market has to offer. Whatever your choice in a car is – minivan, SUV, sedan, hatchback, etc., the used car market has more options than the new car market.
Low insurance costs
As the used car is of a lesser value than a new car, the cost to insure a used car is lesser. The annual insurance premium is lower because the car is already depreciated.
Assures reliability
The used cars that are sold by dealers come with car history and data. You have the information such as the number of previous owners, previous registration status (personal, lease, etc.), mileage validation, etc. You have easy access to all the information, thus making it easier for you to make a right decision.
Low registration fees
You can knock off a substantial amount of registration fee and save money if you choose to buy a second-hand car. Used cars are also subjected to discounted taxes. Ensure that you check the registration fees for yourself before making the purchase.
Saves money
Buying a used car can save you some serious money. You end up paying a lot less than the original value of the car. However, the value depends on the year of manufacture and how many kilometers it has run.
Financing is easy, and the rates are favorable
While it is true that you pay a higher interest rate on a second-hand car loan as compared to a loan for a new vehicle, but online lending platforms like Freo has made financing easy for you by removing the hassles that exist with traditional lenders or banks and providing you with a second-hand car loans on EMI through its personal loan. The eligibility is confirmed within seconds once you register on the app, and the loan is approved and disbursed within minutes. The personal loan can be anything between ₹35,0000 up to ₹ 5 Lakh that is available to you at a low interest rate of 1.08% per month, which is much lower than what you would pay for a second-hand car loan with a traditional bank. You can check out Freo's EMI Calculator for Car Loan to get more details.
Things to Check Before Buying a Second-Hand Car
Before buying a used car, make sure you check the following:
Service History: Ask for service records to see if the car has been regularly maintained.
Car Condition: Inspect the exterior and interior for dents, scratches, rust, broken lights, and damaged seats.
Engine Health: Check for oil leaks, unusual noises, smoke from the exhaust, or warning lights. If needed, get the car inspected by a mechanic.
Mileage: Verify the odometer reading. Compare the mileage with the car's age and maintenance history.
Test Drive: Drive the car to check the engine, brakes, steering, clutch, gearbox, suspension, and overall comfort.
Vehicle Documents: Verify the Registration Certificate (RC), insurance papers, Pollution Under Control (PUC) certificate, service records, and owner's identity.
Accident History: Ask if the car has been involved in any major accidents and inspect for signs of previous repairs or flood damage.
Outstanding Loan: Confirm that there is no pending loan on the vehicle. If it was financed, ask for a No Objection Certificate (NOC) from the lender.
Tyres and Battery: Check the condition of the tyres, tread depth, and battery, as replacing them can increase your costs.
Market Price: Compare the asking price with similar used cars based on the model, age, mileage, and condition to ensure you're paying a fair price.
Ownership Details: Check how many previous owners the car has had. Fewer owners can make it easier to verify the vehicle's history.
Spare Key and Accessories: Ensure the seller provides the spare key, owner's manual, toolkit, and any accessories that came with the car.
However, you need to be sure that you know what you’re looking for in a car, what compromises you are willing to make, and how you plan on checking the quality of the car. Also, remember to ask for all the necessary paperwork and before you finalize the deal, don’t forget to test drive.
So, while you are hunting for the best bargain in second-hand cars, Freo is the good place to keep your loan ready for the purchase. All you have to do is download the app and apply.
Own Your Car Without Overspending
Buying a second-hand car helps you save money, avoid heavy depreciation, and still enjoy the features you need within your budget.
Frequently Asked Questions (FAQs)
1. Is buying a second-hand car a good idea?
Yes, buying a second-hand car can be a good option if the vehicle is well-maintained and suits your needs. It typically costs less than a new car and depreciates more slowly, making it a cost-effective choice for many buyers.
2. What should I check before buying a used car?
Before purchasing a second-hand car, check its service history, ownership records, accident history, mileage, insurance status, and overall mechanical condition. It's also a good idea to take the car for a test drive and have it inspected by a trusted mechanic.
3. Can I get a loan to buy a second-hand car?
Yes, many banks and NBFCs offer used car loans. Loan eligibility depends on factors such as your income, credit score, the car's age, and the lender's terms and conditions.
4. Is insurance cheaper for a second-hand car?
In many cases, yes. Since a used car generally has a lower market value than a new one, the insurance premium may also be lower. However, the premium depends on factors such as the vehicle's age, model, and coverage selected.
5. How old should a second-hand car be?
The ideal age depends on your budget and requirements. Many buyers prefer cars that are around 3 to 5 years old, as they often offer a balance between affordability, features, and remaining useful life.
6. Does a second-hand car lose value quickly?
A second-hand car usually depreciates more slowly than a new car because it has already gone through the steepest depreciation during its initial years.
7. Is it safe to buy a second-hand car from an individual seller?
It can be safe if you thoroughly verify the vehicle's condition, ownership documents, service records, and legal status. Whether buying from an individual or a dealer, it's important to inspect the car carefully before making a purchase.
8. How can I finance a second-hand car purchase?
You can finance a used car through a bank, NBFC, or other eligible lender offering used car loans. Compare interest rates, repayment tenures, processing fees, and eligibility criteria before applying to choose the option that best suits your budget.
Naina Rajgopalan
Naina Rajgopalan has a thing for numbers and a deep fascination to learn about all things finance. She's been money-wise from a young age and has always shared her knowledge and tips with those around her. Being a part of the content team at Freo, a neobank that offers flexible and customised financial products, along with benefits such as insurance on balance, safe & secure banking, and so on, Naina stays updated with the latest of what happens in the banking and fintech industries. She has taken upon herself to share her knowledge with readers across all walks of life to help them manage their finances and budgets better, so they can make better decisions while spending, borrowing, investing and saving.
