In India, the demand for second-hand cars is higher than for new cars, especially among people who are buying their first vehicle. A personal loan to be used as a used-car loan can be a good way to buy a pre-owned car without hitting your wallet too hard.
However, only a small percentage of used-car buyers finance their purchase with a loan, compared to a majority of those buying new cars. This is usually because second-hand car loans from a bank can be difficult and expensive, but that’s where a flexible and affordable personal line of credit from MoneyTap can help.
If you’re planning to buy a pre-owned car on loan, keep these 5 factors in mind:
- Interest – Despite high demand, traditional loan providers are hesitant about financing used cars at affordable rates. When you approach a bank for a used car loan, the interest rate will usually be 3-4% higher than rates for new car loans. If you have a good credit score, a MoneyTap personal loan to be used as a second-hand car loan from an available line of credit is cheaper. You can also make extra payments to reduce the amount on which interest is charged, without prepayment penalties.
- Documentation – The documentation required for a used car loan can be very complicated, and most banks will only approve a loan after the seller or dealer has transferred the car title to the buyer’s name. They can refuse the loan if the RC or Registration Certificate is not in the seller’s name, or if the insurance has not been renewed. If you have a line of credit from MoneyTap, taking a second-hand car loan from it does not involve any of these hassles.
- Loan Amount – Banks and car loan providers use their own valuation process or provide a certain percentage of the IDV or Insured’s Declared Value for a second-hand car. This is usually much lower than the price you need to pay for the vehicle, and you will need to cover the remaining amount from your own pocket. MoneyTap’s approved loan amount is determined only by your eligibility, not the car’s valuation.
- Tenure – Whether you opt for a used car loan or a traditional personal loan from a bank, the maximum tenure provided for repayment will be 5 years. In some cases, it could even be less than that, and failing to repay the complete amount within the decided period of time means heavy penalties and fees. A personal credit line from MoneyTap, on the other hand, is available for a lifetime so you can borrow from it when in need for a used car loan.
- Approval Process – The application and approval process for a second-hand car loan can take quite a while, usually requiring multiple visits to the bank or financial institution offering the loan. Even after approval, disbursal of funds will take a minimum of 7 days. Personal loans may be approved and disbursed a little faster, but it will still take a few days. With MoneyTap, the loan amount is available instantly after approval.
If you’re looking for a used car, there’s no need to wait for funds when you could get them right away with MoneyTap. Apply for a personal line of credit with MoneyTap now and you will have a credit line that you can borrow from to buy your car!