What you need to check before borrowing a used car

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Sumit Garg, co-founder and managing director of Luxury Ride, a showroom for used luxury cars in India, says covid-19 has made many buyers choose to buy used cars over new ones. They feel safer when traveling in their own vehicle.

Hence, before deciding to buy a used car, there are several important steps you should consider, especially with regard to the financing process and documentation.

Select the type, make and model of the car: The first step is to classify the type of car you would like to purchase. Amit Kumar, CEO of OLX Autos India, said: “If you are buying a used car for the first time, then an entry-level car will be the right choice for you, especially if you are on a tight budget. Car ownership has decreased from 7 to 4 years; therefore, if you are buying a used car for the first time or planning to do so in the future, you can start with an entry-level car and gradually upgrade to a larger car over the years. ” used car, you must adhere to the appropriate range, including the purchase price and annual maintenance costs.

“There are many online platforms out there to compare cars within your budget and get great deals. As a standard rule, you should be willing to increase your budget by up to 10% if you get a car that is more expensive but meets your needs, ”said Kumar. Keep a close eye on the age and condition of the vehicle you intend to use. for a purchase, as banks may be reluctant to provide a loan if the car is older than 2-3 years. “Factors such as the number of kilometers traveled, user profile, location of use, accidents or vehicle modifications. etc., you need to check. When buying a used luxury car, you can always ask for service history and odometer records, ”Garg said.

Once you decide which car you want to buy, look for a lender who can help finance your used car. “Companies that sell used cars usually have partnerships with various financial technologies and banks to help buyers finance fast,” Garg said.

When deciding on a used car loan, you should try to pay most of the cost yourself, as this can save you a significant amount of money compared to using a used car. car loan of the total purchase price of the vehicle.

Therefore, if someone decides to use a used car loan, the following considerations should be weighed up:

Having carefully studied the loan offers: It is relatively easy to take advantage of used car loans from banks, NBFCs (non-bank financial companies), fintech platforms and dealers these days. But before you focus on offering a loan, compare the interest rates offered by banks to see if they provide a fixed or variable interest rate.

Kumar said: “Generally, a fixed interest rate is useful as it helps to avoid interest rate fluctuations. Also, look for any additional fees or charges, and whether the bank or NBFC approves the used car you have chosen and whether prepayment flexibility is offered as an associated cost. “

Interest rates on a used car loan are generally slightly higher than on a new car. Garg said: “The interest rate may vary depending on the buyer’s credit history, car type, customer profile, etc. Currently, used car loan rates start at 10% and higher, while new car loan rates start much lower at 7.5%. Lenders may charge a handling fee that can range from 1% to 3% of the value of the vehicle. ”

However, you can compare a pre-approved used car loan versus a used car loan, as in many cases a personal loan is cheaper than a used car loan. In addition, it is relatively easy to obtain a personal loan, and the cost of processing it will be lower.

Documentation: All necessary documentation must be checked, such as Vehicle Registration Certificate (RC), Insurance, No Objection Certificate (NOC) and Pollution Controlled Certificate (PUC).

In addition, you will need Forms 29 and 30, which work together, to inform the Regional Transportation Office (RTO) of the transfer of ownership of the vehicle. “When buying a car, both forms were submitted to RTOs. This process should be completed within two weeks after purchasing the car, ”said Kumar.

If the RC car has a mortgage from a financier (meaning that you have pledged your car with the bank until the car loan is obtained), the seller must repay the loan amount, obtain the NOC and a stamped 35 form from their bank, and share that amount. The NOC is with you. Also check with the seller if there is any email request pending. If so, it must be paid before the car is sold to you.

“In the event that you buy an interstate vehicle, ask the seller or vehicle owner to obtain a NOC from the state of registration so that you can re-register the vehicle’s NOC postage receipt,” Garg said.

Always make sure to transfer the insurance policy from the seller to your name immediately after purchasing the vehicle.

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