Car loan may not be the best option to buy a used car; consider these ways instead

economictimes.indiatimes.com:

You have to pay higher interest rate on used-car loans You can get a loan for a second-hand car from banks, NBFCs or even fintech platforms. The first thing that you need to check is the interest rate of the loan. The interest rate on loans for used cars is usually higher than that on loans for new cars.

While the minimum interest rate of loans for used cars starts from 9.25 per cent, some banks offer loans that start with 16.3 per cent per annum interest rate. Lenders may charge a much higher rate than the minimum rate and, hence, the higher interest rate for used car loans can even go beyond 20 per cent. The interest rate for a new car is much lower — it starts at 8.6 per cent.

Even the upper band of the interest rate on a new car is much lower when compared to a used car. Second-hand car loan: How much loan can you take? Further, in the case of used-car loans, you get a relatively lesser loan amount — typically up to 85 per cent of the value of the car — depending on the lender. «Now most lenders give around 60 per cent to 85 per cent of the value of the used vehicle as loan, whereas in case of new vehicles, it is 85 per cent to 100 per cent,» says Abhishek Kumar, SEBI Registered Investment Adviser and Founder of SahajMoney.Pre-owned car loan: Shorter tenure The tenure for a used-car loan could be lower. In most such loans, the maximum repayment tenure is between one and five years.