I am seeking to buy a pre used car on loan. I have read that maximum LTV is between 60 to 75% of the car price. Who determines the price of the second hand car?


#1

I am seeking to buy a pre used car on loan. I have read that maximum LTV is between 60 to 75% of the car price. Who determines the price of the second hand car?


#2

Yes you have heard it right. Car loans for pre used cars come with a LTV of 60 to 75% of the car price as determined by the car valuation expert of the concerned bank. For example you are seeking to avail the pre used car loan from Bank X. After you shortlist your car, you will need to inform your concerned bank. The bank will send its official car valuation expert to check the price of the car. Whatever the car valuation expert would conclude as per the car’s condition, its make, model and other parameters would be the final price considered by the bank. So your LTV will be calculated as per the price determined by the bank.


#3

Hi Sooraj,

While fixing the LTV of a new car is a relatively easier process the same is quite complex in case of a used car as the rate cannot be ascertained comprehensively and accurately.

Thus in case of the used cars the LTV is determined by taking into consideration the trade-in or wholesale value. The trade of whole sale value is typically used in order to determine the value of a vehicle so as to not overstate the expected sale or trade-in value. It is the basic reason why the financiers always have a lower LTV for used cars so as to remain on the safe side and not over finance an old car.

However the LTV varies with the segment of car being purchase as well as the credit rating and repayment capacity of the borrower.

Cheers,
Team BB