Planning to take used-car loan? 10 points that you should keep in mind

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  • The used car market in India has been growing at a rapid pace. Financial institutions and technology platforms are working towards making loans more affordable in this segment
  • As valuing a used car is more complicated, interest rates are 4-6 percentage points higher compared to new car loans
  • A financier has to value the car based on its age, model and kilometres clocked, and how the four-wheeler was used
  • Some start-ups have started certifying and giving warranties on used cars, and also partnering with lenders to offer competitive finance
  • If you looking for a used car, check out the platforms that offer certification and lenders they have tied-up with
  • A cheaper alternative to taking a used car loan is to take a top-up on your existing home loan
  • If the borrower has a good credit score and a relationship with the bank, he can also check personal loan offers
  • If the difference between a personal loan and a used car loan is over 2 per cent, 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
  • Besides interest rates, check processing fee, partial prepayment and foreclosure charges
  • Some lenders may offer lower interest but a higher processing fee. Calculate the total outgo from your pocket considering the interest rate and processing fee together