Planning to take a loan for used car? Keep an eye on fees and charges

  • At present, more used cars are sold in India than new cars. As this segment grows, players are working towards making loans more affordable
  • Typically, interest rates on used car loans are 4-6 percentage points higher than on new car loans. That’s because valuing used cars is complicated
  • But now start-ups have started certifying and offering warranties on new cars. They also partner with lenders to offer competitive finance
  • When buying a used car, it may help to go through players that offer certification. Check out the loans their partners provide
  • Besides interest rate, check processing fee, partial prepayment charge and foreclosure fee
  • Some lenders may offer lower interest rates but higher processing fees. Calculate the total outgo from your pocket, factoring in both interest rate and processing fee 
  • Lenders have restrictions on part prepayment and foreclosure. Some may not allow prepayment or foreclosure until the borrower has serviced the loan for a specific tenure. Some may even charge a penalty on them