Planning to buy used car on loan? Here're some tips to get the best deal

  • Used car loans are much more expensive than new car loans. The difference in interest rates can be 3-7 percentage points
  • While a new car only involves taking credit risk on the borrower, lending for a used car is more complicated
  • A financier has to come up with the value of the car based on its age, model and kilometres clocked, and how the four-wheeler was used
  • Also, when a lender gives a loan for a pre-owned car, it funds a vehicle that is in the name of the previous owner
  • If the borrower has a good credit score and a relationship with the bank, he can check personal loan offers
  • If the difference between a personal loan and a used car loan is 1-1.5 percentage point, the former is preferable. For a used car, a lender will give a loan of up to 80 per cent of the car value. A personal loan can fund the entire purchase as there’s no restriction on its end use

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