Due to economic slowdown, the new vehicles market in India has experienced a major setback. But surprisingly, the market for pre-owned cars is growing continuously. Studies show where 3.6 million units of new cars were sold in the 2018-19 fiscal year, the selling and buying units of second-hand cars were 4 million.
Here, a major factor is affordability – You can avail a pre-owned car loans or a personal loan to purchase a used car. But, the used car loan amount depends on the condition of the vehicle. Contrarily, personal loan provides you unrestricted access while purchasing a second-hand car.
Here is a list why you should opt for a personal loan to own a used car –
Affordable interest rate
Interest rates of personal loans for used cars are more affordable than pre-owned car loans. Moreover, the state of the vehicle determines the interest rate of a second-hand car loan. So, if the condition of the car doesn’t match with the lender's criteria, interest rates will be higher.
High loan amount
You can avail a personal loan of up to Rs.25 lakh, whereas a second hand car loan amount can only be 70-90% of the car’s value. Therefore, with personal loans, you don’t have to make a down-payment.
Even though tenors of both the loans are the same, with a used car loan, age of the vehicle decides the loan repayment tenor. That means, the actual repayment tenor becomes smaller and the EMIs become higher.
Simple eligibility criteria
Personal loan eligibility criteria are mostly similar to the eligibility criteria of a used car loan. They both require a high CIBIL score and steady income. Unlike a personal loan, second-hand car loans will be approved only within a certain age of the car.
To sum it up, even though you can avail a pre-owned car loan easily as it is a secured loan, a personal loan is a better option considering the above factors. Moreover, NBFCs provide personal loans with easy and hassle-free procedures too.