Used Car Loan Details


#1

Hi, I was planning to buy a used car worth 3 Lacs. I was told by the bank(ICICI, where i hold my salary a/c since 3 years), i can avail loans for the cars with age not more than 4-5 years. Hence, i did round up on a 2009 model. Now my query is, how much loan can i avail on the total amount? Interest rate? and is the repayement tenure optional or fixed by the bank?
And what are my prepayement scenarios incase i would want to clear the loan quickly?
I did talk to the branch manager where my a/c is there, he insisted on buying new car and refused to give away any proper details regarding my needs(Thats one joke on customer care!!)


#2

Going for a used car is not a bad idea as you can buy a good model at a relatively cheap rate. Banks usually don’t provide loans to vehicles older than 4 to 5 years. The age of the car and its model play a key role in deciding the interest rate and amount of loan that can be availed.

Interest rates of loans offered for used cars on an average cost 3-4% more than that for a new car. The loan offered for purchase of second hand cars usually ranges between 60% and 75% of the on road price of the vehicle. The older the vehicle is the more will be the margin. The repayment tenure can be chose as per your convenience, but banks approve tenure with a condition that, the age of the car and the tenure of the loan should not exceed seven years.

You can pre-pay your car loan at any time you wish. Most banks charge 2% of the outstanding balance as pre-closure penalty, and with NBFCs it can go up to 5%.
Though most banks now offer loans for used cars, banks are more comfortable in providing loans for new cars. That might be the reason why the manager suggested you in going for a new car. The decision is yours! You can check out details of used car loans with various banks and compare the available schemes to get into a decision. Taking loan from the same bank where you have account can be beneficial for negotiating or for interest rate concessions.


#4

This is the first time when I read about the used car loan.This is good and interesting for me.Thanks for such question.I comment here to get more detail on this topic.:blue_car:


#5

Hi Sandeep,
The loan amount will depend on your income, present loans among other things. The bank might also take into account your relationship with them. Some banks do take your average account balance into account before providing a loan offer if you have a savings account with them. The prepayment terms are decided by the bank. Understand that most banks are reluctant to provide a loan for a used car because they run the risk of not being able to sell the car if the borrower defaults on the loan. We suggest that you ask your bank if they have any preapproved loan offers for you. You can negotiate the interest rate based on your relationship with the bank. If you want to avoid all those hassles, you can apply for a Car Loan with us - https://www.bankbazaar.com/car-loan.html.
Cheers,
BB Expert