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How To Arrange A Loan For A Second Hand Car...

05 February 2016, 11:44 AM

Whether you are a newly certified driver, someone looking for a price-effective entry into the world of motoring or simply seeking a lateral upgrade, the pre-owned market is often the best place for you. But the second hand car scene is also fraught with a lot of risk and there’s always the chance of getting saddled with a car that’ll not just drain your finances, but also keep you away from your motoring. So tread wisely there.

One of the most important things to remember is that getting a second hand car loan is a battle won in itself, so here’s a good way to go about bettering your chances on it. The usual path is to identify the vehicle and then reach out to the lender. But while you’re busy seeking the vehicle of your dreams, do keep abreast with the paperwork required. Used cars and particularly the hot favourites rarely stay in the dealer lot for long. So having your paperwork ready in advance is well begun.

Also, bear in mind that the interest rates for a loan on a second hand car are going to be higher than that for a new one. You could (and should) negotiate for a better deal, but the rates are going to be higher, period.

The self-contribution too is going to be higher than that for a new car. Typically speaking, with a second hand car loan, the buyer ends up paying anywhere up to 30% out of their own pocket (unlike the 10-15% with new cars). In some instances, the self-contribution component can even go up to 40 or 50% of the car’s cost.

Two factors that play a huge role in getting a loan for a second hand car is its age and whether it is still in production. Typically speaking, the older the car, the tougher it gets in obtaining financing. Also, if it a car which is no longer in production, then finance options start to dry up quicker than you can crank up the car! 

These days, organized car dealers are springing up everywhere. These range from pure, online only setups, to proper showrooms & dealer lots displaying certified cars. While the prices on these cars are typically higher than those found in the non-organized sector, this can often be offset by the fact that getting financing on them is easier. Moreover, most of these dealers tie-up with financers who can then give you a favourable deal.

So fret not & good luck with your search for your dream machine out there.

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