Guide for Buying a Second-Hand Car on EMI

Second Hand Car on EMI

Owning a car (or several cars) has become synonymous with prosperity and status-symbol for Indians, since the inception of automobiles in South-East Asia. But even now, it is a mere dream for most middle-class Indians to own a car. Thus, India’s second-hand used car market has been thriving since the availability of mass-market cars in India. However, even second-hand pre-owned cars turn out to be a bit expensive as a one-time payment. Hence, Buying a Second Hand Car on EMI is a viable option which many banks/lenders offer.

What are the advantages of Second-Hand Car loans on EMI?

  • Availability of several used cars for loan:
  1. Several popular car types (like Hatchback, SUV, MUV, Sedan, and Commercial) of multiple brands are available for getting a loan on.
  2. Even special loans on used classic/vintage cars or used sports-cars are also available in the market.
  • Age of Car:
  1. In most cases, the loan is available for cars up to 10 years old.  However, as mentioned before, special loans are available for classic and vintage cars.
  2. Very few direct financing car manufacturers, who sell their brand’s pre-owned models, often offer car loans for vehicles around 15 years of age.
  • Often the interest rates are lower than most loans without collateral.
  • Tenure for repayment and the number as well as the amount of monthly EMIs is flexible to choose from a set of plans.
  • Easy payout of loans after the initial down payment is done. Some loans are even available for zero-down payment options.

Important things to note about EMIs on Second-Hand Car loans:

  • The amount of insurance is not included in most loans.
  • Cost for Third-party accessories and customizations are not offered in the loan.
  • The 100% finance options are only available for both a minimum and a maximum loan amount.
  • There may be special clauses for cars with conversion kits or cars that run on alternative fuel.
  • The cost of transfer of registration is also not included in the loan.
  • Unlike loans availed for new cars, used car loans may take a lot of time to get approved. Processing time may range from a couple of hours to a couple of days in case of some lenders/banks.
  • There will be special terms and conditions on repayment of the loan in the case of an accident or the car breaking down. Most loans state that failure of fulfilling payments for the loan will result in the reposition of the car by the lender.

Selection of suitable Second-Hand Car loans on EMI payment plans:

This will be based upon a number of criteria:

  • Tenure of the loan:

This will be determined based on the borrower’s/buyers’ financial capability to pay back the loan within a certain amount of time.

  • Monthly EMI payable by the borrower:

This will determine how much the borrower can afford to pay per month as EMI.

  • Types of EMI rates:

Fixed: This plan is suitable if the borrower’s income rate is constant. In this case, the borrower will be paying a constant amount per month as EMI.

Structured/Adjustable: This plan is suitable if the borrower’s income rate will increase or fluctuate soon. This will allow the borrower to pay more initially and less later on, or vice-versa.

Learn more about loans and finance from the website.