Opting for a high-end pre-owned vehicle at a lower price will offer your a number of advantages. Not only does it provide access to the luxurious models at a fraction of the cost, but buying a used car also provides you with benefits like lower depreciation rates, reduced insurance premiums, and potentially lower registration fees.

Our expert and dedicated executives are here to assist you throughout your journey, right from selecting the right dealer, ensuring a seamless, and, to a satisfying purchasing experience. Opting to buy a used car not only helps you save money at the beginning but also helps you stay financially secure and worry-free in the long run.

Let us break down the basics to help you effectively compare your car loan options.

Why does it matter?

While your choice between buying a new car vs used car loan, holds the key to your financial peace, each option has its own perks, and understanding the differences will guide you to the perfect fit for your wallet and

Below is a comparison of used car loans vs new car loans for your understanding:

What are Used Car Loans?

A Used Car Loan allows you to purchase a pre-owned vehicle without draining your savings. It covers the cost of the car, letting you pay in monthly instalments spread across 1 to 5 years.

Key Features of a Used Car Loan:

When considering financing for a used car purchase, you need to understand the key features of a Used Car Loan. These Loans offer a range of advantageous features aimed at simplifying and making the purchase of a new vehicle more affordable. With a focus on flexibility, affordability, and peace of mind throughout the Loan process, Used Car Loans aim to make it easier for you to secure financing for your desired vehicle.

Let us now explore and understand some of the essential aspects of Used Car Loans that make them an attractive option for budget-conscious buyers like yourself.

1. Higher Interest Rates: Due to depreciation, Used Car Loans often have slightly higher interest rates than new car loans. However, borrowers with good credit history can still avail Loans at competitive rates from us..
2. Shorter Loan Terms: Used Car Loans usually come with shorter repayment periods, ranging from 1 to 5 years. We offer a tenure of up to 5 years. You should keep in mind that, opting for shorter terms can lead to reduced overall interest costs and faster vehicle ownership.
3. Lower Loan Amounts: While some lenders might offer lesser funds for used cars due to their lower market value, we ensure secured funding of up to 95% of your used car’s value.

Also Read – 4-step guide to buy a used car in India

Pros of a Used Car Loan over New Car Loan:

• Used Car Loans offer affordable options, reducing upfront expenses
• Used cars experience less value decline compared to new ones, saving your money
• Insuring a used car is cheaper, providing ongoing savings
• Drive away right after loan approval, enjoying immediate use of the vehicle
• There is no registration cost for a used car, no lifetime tax, only, the name transfer cost is applicable* (Revised)

Cons of a Used Car Loan:

• Used Car Loans often have higher rates due to perceived risk
• Repayment periods may be shorter, leading to higher monthly payments
• While lesser depreciation is there than new cars, used cars still depreciate, impacting its resale value

What are New Car Loans?

If the idea of hitting the road in a gleaming new car gets you excited, a new car loan is the perfect move. The interest rates for these loans range from 9% p.a onwards. You can choose between fixed and floating interest rates. With a fixed rate, your monthly payments remain the same. But with a floating interest rate, your payments may change based on market trends.

Key features of a New Car Loan:

Let us explore the key aspects of New Car Loans:

1. Competitive Interest Rates: New Car Loans typically have lower interest rates compared to Used Car Loans. This is because new cars have a higher resale value, reducing the lender’s risk. Despite used cars being cheaper, lower interest rates can result in lower overall interest costs and monthly payments.
2. Extended Loan Durations: New Car Loans often come with extended repayment periods, typically spanning from 1 to 7 years, stretching out the repayment timeline helps distribute the car’s cost over a longer period, resulting in lower monthly payments. However, it is important to note that opting for longer loan terms inevitably leads to a higher overall interest payment.
3. Higher Loan Amounts: New cars generally hold higher market value, allowing you to get a larger Loan amount. This aspect minimises the need for a higher down payment.

When considering any Loan, we should know its pros and cons:

Pros of a New Car Loan:

• New vehicles typically come equipped with the latest safety features, ensuring better driver and passenger safety
• Loan allows you to spread the cost of the car over time, making it more manageable to fit into your monthly budget.

New car might come with warranties that covers maintenance and repairs to an extent, reducing the chance of unexpected expenses

Cons of a New Car Loan:

• Rapid depreciation leading to significant loss in resale value
• Higher initial cost compared to used cars
• Higher insurance premiums due to higher value

Answering the most important question: Should I buy a new or used car?

1. Budget and Affordability: Determine your monthly payments by assessing your budget. Used cars often offer a more budget-friendly option, allowing you to align your financial goals and make an informed decision between a new car and an older model.
2. Impact of Depreciation: Calculate the impact of depreciation on your investment. New cars undergo higher value decline in their early years, whereas used cars have already experienced a major part of this depreciation, potentially offering better value for your money over time.
3. Vehicle Condition and Reliability: Thoroughly inspect the condition and maintenance history when buying a used car. This step ensures reliability and helps you assess potential maintenance costs, providing a clear picture of the vehicle’s overall value.
4. Insurance and Warranty: Consider the financial aspects of ownership, including insurance premiums and warranty coverage. While new cars may come with higher insurance costs, they also offer comprehensive warranties. Used cars, on the other hand, might have lower insurance premiums, but you need to account for potential repair costs without extensive warranty coverage.
5. Personal Preferences: Factor in your personal preferences when deciding between a new and used car. If you prioritise the latest features, technology, and aesthetics, a new car loan may be appealing. However, if affordability and value for money are crucial, a Used Car Loan presents a compelling alternative with a well-maintained pre-owned vehicle.

Also Read – Know everything about used car loans

New Car vs Used Car Loans: Finding the Best Option

When comparing New Car and Used Car Loans, the latter often proves to be the better choice. Old car loans offer affordability and value for money, with reduced upfront expenses and less depreciation compared to new vehicles. Additionally, insuring a used car is typically more economical, leading to ongoing savings. Therefore, opting for a Used Car Loan can provide significant financial benefits and practicality for your next car purchase.

Also Read – Buying a used car on a loan? Here are 6 things you must know

FAQs –

1. Why is the used car loan interest rate high?

The interest rate for Used Car Loans tends to be higher due to the perceived risk associated with used vehicles, leading lenders to impose a slightly higher rates.

2. Which car is the best, new or old?

When considering a new car, you get the latest technology, but they often depreciate rapidly in value. On the other hand, opting for a used car allows you to enjoy the amenities within a constrained budget. Ultimately, the decision depends on your personal preference and financial considerations.

3. Can I get a Loan on the full value of a second-hand car?

Typically, lenders might request a down payment for Used Car Loans, even if it doesn’t cover the entire vehicle cost.

However, we provide financing of up to 100% of the car valuation, depending on factors like a good credit score, the vehicle’s condition, etc.

4. How can I get a low-interest loan for a used car?

To secure a low-interest loan for a used car, maintain a good credit score, make a substantial down payment, opt for a shorter loan term, and look for the best offers! For personalised assistance, visit us for an expert guidance and tailored financing solutions.

Used car loan presents prospective buyers with the following benefits:

• The loan amount is lower when compared to the loan amount for a new car. The used car loan calculator, therefore, will tabulate a lower monthly EMI.

• The application process for a used car loan is simpler and requires minimum documents.

• 100% used car finance may be available with some banks or NBFCs.

Eligibility criteria and documents required for TVS Credit Used Car Loan

Typically, anyone can apply for a used car loan. There are, however, some requirements that individuals who are salaried employees, are self-employed, are in a proprietorship and/or partnership firm, or private or public limited companies must meet.

Salaried

• Age, address, ID and signature proof

• Income document (salary slip/form 16/ITR with computation of income)

• Bank statement OR Passbook Copy

• Photocopy of vehicle RC book and insurance certificate

• Pan Card

Self-Employed

• GST certificate

• Shop Act or business proof Underage

• Address & ID Proof

• Repayment track of existing or completed loan

• TDS certificate

• PAN Card

Proprietorship and/or Partnership Firm

• Income document (salary slip/form 16/ITR with computation of income)

• Photocopy of vehicle RC book and insurance certificate

• Partnership deed with declaration for partnership firm

• Age, address, ID, and signature proof

• Repayment track of existing or completed loan

• Shop Act or Business Proof

• Bank statement OR Passbook Copy

• PAN Card

• TDS certificate

• GST certificate

Private or Public Limited Companies

• Age, address, ID, and signature proof

• Income document (salary slip/form 16/ITR with computation of income)

• Bank statement OR Passbook Copy

• MOA/AOA with board resolution for private/public ltd. firm

• PAN Card

Things to remember before getting a used car on loan

• Check the car

Ensure that the car you want to purchase is in good condition and the seller is providing all the papers – registration and insurance – and correct vehicle history. TVS Credit offers loans on cars that are up to 12 years old.

• Research used car finance

Before taking a loan, research the lender and their used car loan interest rates. TVS Credit provides used car loans that among up to 95% of the asset value.

• Read the ‘Terms & Conditions’

Terms and conditions on used car finance vary from lender to lender. It is advised to thoroughly read repayment terms and other fine print before signing the application.

You can visit TVS Credit online or offline to fill out the application form. Along with the form, you must submit the required documents based on the eligibility criteria to qualify and obtain a used car loan.

In India, the used car market is expanding. According to statistics, there are 220 used or previously used cars available for purchase for every 100 new cars sold. The volume of used car sales is 50% more than sales of new vehicles.

Causes for the growing used car market

As non-refundable income rises, fewer people own cars for longer periods. Earlier, the ownership spans were roughly 7-8 years; currently, they are 4-5 years. Hence, more cars are being sold in the used car market.

A used car is available at around 60-70% of the on-road price compared to a new car. Better manufacturing techniques ensure that a car’s quality does not degrade even after 2 to 3 years of use. Therefore, buying a used car can help you get the most for your money.

Get the best used car loan interest rates at TVS Credit with easy EMIs and great offers.

There are many options available for trade of used cars who offer additional benefits like maintenance of the car, assurance of quality, warranty, financing, and other added attractions like RC book transfer, etc. which makes the experience of buying a used car much easier.

Thanks to superior competitors and increased market clarity, buying a used automobile is no longer seen as inferior.

With more people entering the workforce and public transportation still in its infancy in many American cities, buying two cars is quickly becoming a standard practise. People prefer to purchase second-hand automobiles as their second vehicle. Apply for a hassle-free loan from TVS Credit.

As the business rises for cab services, used automobiles are frequently favoured more than new cars due to cost considerations.

Used automobile buyers have more flexible alternatives for financing.

Want to finance used cars? Know more…

– Financing is available for all makes and models of used vehicles. However, when it comes to imported or extremely old autos, lenders have their reservations. These are subject to individual case approval.

– There are numerous financing options for second-hand cars. Individuals wishing to purchase used cars can turn to banks and other non-banking financial institutions like TVS Credit for assistance.

– The valuation of the vehicle is the most challenging aspect of financing a used car. A new car has a clearly defined price, but it might be difficult to determine a used car’s value.

The points to consider are – the distance travelled, the user type (personal or business use), the location of use (cars from flood-prone areas may not be chosen), any accidents or changes made to the automobile, the car’s clean title, etc.

Lenders anticipate that a portion of the estimated value of the used car will be paid as a down payment. Lenders often use a loan-to-value ratio between 65 and 80%. However, certain lenders, including TVS Credit, do make exceptions.

Interest Rates for Used Car Loans

Buying a used car comes with risks for both the buyer and the lender. As a result, used automobile loans have slightly higher interest rates than new car loans.

Currently, used automobile loan rates are variable and range from 11 to 16 per cent. New car loan rates, meanwhile, begin at a significantly lower 7.75%.

Loan Terms for Used Cars

Used car loans are also influenced by the vehicle’s quality. However, because of how subjective these concerns are, most banks and financial institutions set a maximum loan term for used car loans.

Some lenders only lend for used automobiles that haven’t been driven for a particular number of years or up to a certain number of years from the date of first registration. Used car loans often have shorter terms than new automobile loans, which can last up to 7 years.

Importance of credit scores

Lenders try to offset the risk associated with financing for these automobiles by charging a higher interest rate on loans for used cars backed by an asset. As a result, the applicant’s credit scores are not given much weight.

So, it might be simpler for people with bad credit or no credit to get used automobile loans. A good credit score, however, can result in bonus points and the ability to bargain for lower used car interest rates.

Process of approving loans

In comparison to a new car, the loan approval process for a used car could take a little longer. When you obtain financing from affiliated finance companies like TVS Credit, this process might be accelerated.

Having more financing choices makes it possible for people to purchase used cars for less money. However, as with any other loans, we want to emphasise that maintaining good credit is more important than anything else. No matter if you want a new or used car, always borrow as much as you can afford to repay and make your payments on time.

Apply for Used Car loan with easy documentation from TVS Credit.

Buying aused car loan is not as difficult as it used to be. However, if you are planning to buy a used car on a loan, there are a few things you must keep in mind so as to make your purchase smooth and quick.

Here are some of the things you must consider while buying a used car on loan:

1. Check your eligibility

There are different eligibility criteria for salaried and self-employed professionals in terms of income and the number of years of employment. So, make sure you check if you are eligible for the pre owned car loan. [Check your eligibility on our Used Car Eligibility Calculator]

2. Double check your documents

Once the eligibility check is done, make sure you have got all the documents you need to apply for the loan. For example, you’ll need identity proof, age proof, address proof, income proof, and signature verification proof.

3. Pre-determine the budget

Decide the car you want to buy! A wide range of makes, right from the low budget small cars to the high-end SUVs, is available to you. To select a car, you must decide upon your budget first. So, make sure you determine your budget based on your income and the EMIs that you can afford to pay.

4. Analyse your credit report

Make sure your credit score is more than 750. The chances of getting your loan approved increases with a good CIBIL score, no matter how many loans you have taken in the past. The only condition is that you must have paid all the EMIs on time. [Calculate your CIBIL score]

[Read about our tips on increasing your CIBIL Score]

5. Make short tenures

The value of the used car keeps depreciating as it ages. The sooner you sell it, the more value you will get for it. Moreover, you will have to pay less interest in short tenures as compared to the long ones. So, it is advisable to make your tenure short so that you can clear off your loan soon.

6. Be aware of scams

It is always a good idea to buy from a reputed dealer otherwise there are chances you might be lured by fraudulent offers. They might want to sell off the cars that have met with an accident. They might fleece you with high-interest rates claiming that your credit report is bad. So, make sure you do your homework before you speak to the dealer and be aware of scammers.

Banks and other financial institutions understand people buy a used car for various reasons. So, these days, banks have a variety of used car loans with attractive offers and low car loan interest rates. Don’t hesitate in buying a used car on loan. Just keep the above-listed tips in mind to avoid the common mistakes people commit while getting loans for used cars.

Doubtful if you should?

Well, go for it! Used cars are affordable, have lower depreciation, require lower insurance and come with a warranty, which makes them as good as a new one! It all depends on your selection process.

The market for used cars is massive and growing rapidly. However, the second-hand car industry is semi-organised in India, making it difficult to rely on roadside car dealers. You have to keep a thousand things in mind, viz. documents, insurance, car loan interest rate, and what not. If you do not want to be taken for a ride by car dealers or owners, it is advisable to consult someone who can help navigate you through the process.

Here are some quick tips for buying a used car:

Step1: Select your seller carefully

Before you decide on anything else, the first step is to decide from whom you want to buy the used car. Three options prevail in India: you can buy it from an individual, a broker or a franchised pre-owned dealer. If you know the seller, then the first option is undoubtedly the best! Alternatively, you could buy from a small-scale used car broker. However, make sure you negotiate the quoted price and check the car thoroughly, as they are often in hurry to close deals. Lastly, if you buy from the other players in the market, it might cost you more, but you won’t have to worry about the condition of the car. So don’t rush, think about your priorities, and decide accordingly.

Step2: Do your homework diligently

1. Select a model:

This step involves extensive research. If you’re interested in a particular make, ask a couple of owners about the pros and cons of owning it. Inquire about the running and maintenance cost so that you know its affordability in the long run. Once you have finalized a model, move to the next step.

2. Negotiate the price:

Research online and offline about the rates of the car you want to buy so that you can negotiate. However, do not forget that rates vary as per the manufacturing year, the condition of the car, and even colour.

3. Learn the features:

It is not just about money; you must also be familiar with the features of the car so that you can spot missing components and accessories while you are inspecting the car. Oh, yes that’s the next step!

Step3: Inspect the car thoroughly

Get the car inspected by a trusted mechanic so that you can get the problems fixed by the owner or negotiate before you close the deal.

• The performance of the car depends majorly on the engine. Any engine-related damage is going to cost you more, so make sure it is working perfectly. Also, get the air, fuel, transmission, and oil filters changed.
• Take a test drive to check the brakes. Try driving at slow and high speeds and see if there is any vibration or strange noise. Also, see if the car gets pulled in one direction.
• Minor dents and scratches are no big deal. However, ensure that it has not met with a major accident before.
• Take a look at the interior once and make sure steering, seats, door handles, etc. are in good condition. Check if the electric equipment like air conditioner, music system, and power windows are working fine.
• The last, but certainly not the least, don’t forget to examine all the tires.

Step4: Do the paperwork comprehensively

The first step is to get the ownership transferred in your name. Transfer the Registration Certificate (RC) in your name and then check for other papers. Even when the RC is in your name, if the insurance isn’t, it gets nullified. So make sure you transfer the insurance policy in your name or get a new one. See if the car has had any accidents and check NCB (No Claim Bonus) – the higher the NCB, the better. Ensure there are no pending loans on the car that you are buying. Check the required forms for the same. Get all the other required documents like a valid Pollution Under Control (PUC) certificate, road tax receipt, car purchase invoice, the NOC, etc.

Bonus Tip:

Don’t forget to check for used car loan interest rates beforehand if you’re planning to take a loan to buy the car. Get your car washed and quick fixes done before the first drive so that you are all set to flaunt your smart purchase!