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Finance for Used Cars
The Used
Car Market has shown a steep growth and most financiers are looking at
the industry that appears promising. With the used car prices spiraling
downwards many people who would earlier have not consider the expense
of owning and maintaining a car are now seriously considering buying one.
Today the price gap between a top end two wheelers and second hand cars
has narrowed down and many two wheeler buyers are now aspiring to own
a car.
 Unlike
earlier times when availing finance for a used car was either very expensive
or very slow, today you have some leading financiers in the business.
While CitiBank, Maruti Countrywide & Kotak Mahindra are already aggressive
into financing used cars, many other Banks and Finance Companies are gearing
up to enter this market with attractive and customer friendly finance
schemes.
For financiers, 'Used Cars' have always been a high risk asset and they
are more cautious while disbursing finance. Thus most lenders have identified
and take exposure only on certain segments of borrowers and cars. Thus
if you are falling in the right segment, buying a car can be easier than
driving one.
Which Cars are easily financed -
As
a used car is an asset that has already depreciated, most lenders would
want to finance younger cars - 1 to 3 years old. You could get finance
for older cars that are in good condition but the extent of finance
would be lower, you may have to shell out as much as 50% of the cars
market value as downpayment.
Financiers
are also comfortable while lending for cars that have a reasonable resale
value and a higher demand. Thus you could avail finance for a smaller
car like the Maruti or an Uno more easily than a bigger and expensive
car like a Cielo or an Opel.
The
extent of finance is usually limited from 50% to 80% of the cars market
value. The market value of the car is assessed by the financier's approved
valuation expert.
Who
can avail a loan
-
Salaried
employees and Self employed individuals
- Almost every lender financing for used cars rates the salaried employees
as the premium customers. With growing disposable incomes many salaried
employees today can consider buying a used car and would get a green
channel with all financiers.
The documentation process for loan approval is simple and fast.
The finance charges for used cars are higher than that for new cars
but the buyer can surely get more comfort by buying a better car than
his budget would allow him. Most buyers with limited finance resources
end up buying cars that make them regret their initial decision. A badly
used car turns out to be very expensive - high running costs and frequent
trips to the garage. Even disposing such a car becomes a problem. With
finance schemes you can buy a much better car and this would prove more
economical.
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