If buying a brand new vehicle is way out of your budget you could settle down for a used car. Over a period of time the used car market has been growing and unlike earlier times there are a number of banks today offering finance to buy second-hand cars. So whether you plan to buy a brand new car or a used car options are aplenty.
While earlier the used car segment was majorly an unorganized market today it is comparatively more organized and there are a number of foreign banks offering loans to buy used cars.
High interest rate: On the rate front it may be noted that interest rates for used cars are slightly on the higher side hovering around 18 to 20 percent on an average compared to brand new vehicles that carry interest rate of about 9 percent.
This is mainly because determination of the value of the used car is a major hassle. While new cars have their fixed MRPs, for used cars the prices are decided on the basis of a number of parameters.
Arriving at the market value: The market value of the vehicle is arrived at after inspecting it by the lending agency. The make, the year of manufacture, the model, accidents met with, mileage, repairs undertaken, the number of times there has been a change of ownership, servicing done, wear and tear are some of the factors that are taken into account before fixing the price. Also find out if the insurance premium amount is on the higher side in which case it is a clear indication that major repairs have been carried out.
Resale value of your car: Also before taking a final decision on buying a used car try getting a thorough examination of the vehicle conducted by a seasoned mechanic or an expert. Besides be informed that chances are, the resale value of your used car may go down by a major amount annually. Accordingly it may mean entailing a major loss especially if its borrowed money. You would be paying a high interest rate on that amount.
So before you narrow down on the purchase of a second hand car do a thorough check of the various factors mentioned above