Finance

New Car Loan vs. Used Car Loan       

Transportation is a fascinating subject occupying the minds of people all the time. Ever since the motor car was invented in 1885 it has had a profound influence on people, becoming a status symbol and an expression of an individual’s personality. No wonder that everyone aspires to own a car. Today, the personal automobile industry is a $2 trillion industry. India too is not immune from charms of the automobile. In fact, India produces over 3 million new cars annually.

Whenever you buy a new car you either buy it for the first time or buy it to replace an older car or buy it as an additional car. Typically, you tend to dispose of the old car in the used car market. The used car (second-hand car) or the market in India is thriving and with the spread of the Internet, smartphone and online sale process it is only growing rapidly.

Often, you are in a dilemma whether to buy a new car or a used car. The used car is a great alternative to the new car because of the many benefits it passes on to you. Moreover, the used car market has become very professional and tech-savvy as they offer used cars online. Every stakeholder in the used car market including lenders and car manufacturers have entered the fray and offer used cars. The lenders not only offer new car loans but also offer second-hand car loans.So, if you are approaching a lender such as Tata Capital for a second-hand car loan or a new car loan, let’s tell you why you should go for a used car loan rather than a new car loan.

Loans available for used cars

Today, lenders have opened their doors to used car loans. They offer attractive terms including reasonable interest rates, higher loan amount and longer tenures. They are almost close to terms for new cars.

More value for the same price

While a new car is great for your ego, you can satisfy another ego of having a better and higher-powered car when you buy a used car. You can get the next higher level car for the same price as a new car in the lower level. For instance, you could get a good Hyundai i20 used car for the same price you pay for the Hyundai i10 new car. In fact, if you look around you can get a good deal on any other brandMore features

Car makers adopt the concept of product differentiation and introduce cars with better features suitable to different segments of the market. It is common practice for them to launch periodically cars with more advanced features to entice buyers to go in for the new car with better features. Of course, these features come at a higher price. Now, when buyers go in for the higher featured car they sell their old car in the used car market at a high discount as that is the nature of a used car market. For instance, a new Hyundai i10 Asta 1.2 CRDI Diesel costs Rs 9.13 lakh on road in Bangalore. When you look at a used car alternative, you can get a 2-year old Hyundai i20 Asta in good condition for Rs 8.0 lakh which has 30,000 Km on the odometer. The i20 gives you more power (89bhp/74bhp) and more room than the i10. Besides, the i20 looks more sophisticated than the i10. It is also considered safer than the i10. Often, the used car carries an extended warranty and you get the benefit. In most cases, the used car is sold as a pre-owned car carrying warranties. So, you get a good deal.

More safety

Typically, higher the price of a car higher is the safety factor. Thus, you can expect higher safety from the i20 than the i10.Loss of value is less in a used car than a new car

The used car that you buy gets you a good price when you sell it. This is because it loses less in terms of value than it would when it was new. The new car loses the maximum soon after purchase and loses steadily thereafter. Thus, the old car escapes the maximum loss encountered by new cars. Further, used cars have more life than new cars for the same price.

More choice

In the earlier years, there was a limited choice of good used cars. Today, the situation has changed with the entry of online dealers and the concept of pre-owned cars certified by car makers. You can choose from thousands of cars. For instance, Tata Capital besides offering secondhand car loan also offers an online used car store that lists more than 17,000 cars for you to choose from.The new car vs. used car debate is quite interesting and if you handle the sale process prudently your used car can serve you as good as a new car does and in our opinion a high value for money proposition. After reading the foregoing, whatever is your choice – to go for a used car loan or a new car loan – Tata Capital is always there for you.

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