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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
Reduced ownership periods
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.
Used cars at affordable rates
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.
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Improved platforms for buying and selling used cars
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.
Changed attitudes
Thanks to superior competitors and increased market clarity, buying a used automobile is no longer seen as inferior.
Owning more than one automobile in the home
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.
Increased ownership of cars
As the business rises for cab services, used automobiles are frequently favoured more than new cars due to cost considerations.
Easy access to financing
Used automobile buyers have more flexible alternatives for financing.
Want to finance used cars? Know more…
Types of cars financed – 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.
Finance choices – 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.
Car valuation – 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.
Used-vehicle Loan to Value: 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.
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