The COVID-19 pandemic has hit most Indian industries hard but has also proved to be a boon for some. Case in point, the used car market is likely to benefit inordinately from the coronavirus outbreak. As the country limps out of the lockdown, consumers are focusing on smaller budget personal mobility.
Many experts believe Indians are likely to shun public transport or shared vehicles, to avoid contracting COVID-19. Another reason for consumers preference shifting towards second-hand cars is the uncertain economic environment and subsequent job losses as well as wage cuts.
As the COVID-19 pandemic has taken a toll on people's personal finances as well as businesses alike, a lot of people would take to used vehicles instead of spending money on new ones.
"COVID-19 has taken a toll on people's personal finances as well as businesses in general. In the wake of such events, not a lot of people will prefer spending money on new ones and instead opt for used vehicles to address their personal mobility needs," credit agency Crisil said in a note recently.
So, if you re planning to buy a second-hand car too, here's a primer.
Where to buy second-hand cars from?
There are three ways you can buy used cars:-
1. Directly from seller
2. Local dealer
3. Online used car portals
Pre-owned car sellers such as CarDekho, Cars24, Quikr, Zig Wheels offer good deals on used cars. You can also look at pre-owned car companies such as Mahindra First Choice and Maruti True Value that offer customised deals to lure customers.
Other OEMs (Original equipment manufacturer) such as Hyundai H Promise, Toyota U-Trust, Quikr, Honda Auto Terrace, Ford Assured, as well as luxury carmakers, such as Audi, BMW, and JLR, also have their outlets and operations in the local market.
You can also visit local markets for used cars. For example, used car markets in Delhi's Sarojini Nagar and Karol Bagh are quite well known in the city.
Mumbai and Bengaluru too have a flourishing used car markets. You can find out about the local dealers around you by simply googling the businesses or enquiring around.
Buying a second-hand car in India is unique unlike developed markets that have lemon laws, developed vehicle pricing tools and advanced vehicle history reports, etc. But in India taxation, registration transfer etc. add to the intricacy of buying a second-hand car.
How to finalise buying a second-hand car?
Step-1: Pick a car you want to buy
The first step is to zero in on the type or model of car you want to purchase commensurate with your needs. Make a simple checklist that should help you crystallise your requirements. Some of the criterion you can look at are - Price/budget, performance, safety & security, fuel economy, brand/model, your lifestyle etc.
Another key criterion while choosing the vehicle is that the registration of the car should be in the same state you are residing in with proof of residence. In case you live in a rented accommodation, you need to have a lease deed and a letter from your company certifying that you reside in your current residence.
Step-2 Identify your budget
Now that you know the criteria you need to look at while zeroing in on a car corresponding to your needs, determine your approximate budget. Once that is ascertained, determine if you want to pay from your pocket or look for a used car loan.
Several private banks offer these loans while public sector banks offer loans on second-hand cars only if you have an account with them. Also note that interest rates on pre-owned cars are higher when compared to new cars. It varies in the range of 15-20% basis your credit profile, the model, age of the car you are buying, whether it is certified or not, etc.
Some companies also offer loans to employees for purchasing a used car as per their car policies. Check with your company's HR, if this would be a viable option. If it doesn't work out, then approach your bank and find out the rate of interest, up to what value of the vehicle is it willing to fund as well as the tenure (number of months). Many used car dealers are also associated with banks and financial institutions offering used car loans. In case you are purchasing a certified car, banks generally offer a lower interest rate on the same as the risk associated with a car's condition is mitigated.
Next, set a time frame to search and identify your pick. 30-45 days is a good timeline for the same.
Step-3 Research about the car brand, model, and its market prices
Lot of information is readily available online about cars, their features, fuel economy, specifications etc. A lot of online portals give detailed information about the car brands, and their pricing. Choose your pick commensurate to your needs and lifestyle.
Step-4 Find used cars available for sale
Look for pre-owned cars available for sale. You can visit websites such as CarDekho, Cars24, Quikr, Zig Wheels, Carwale, Gaddi, Cartrade, etc. to find the right deal. You can also search online for used car dealers in your area. Shortlist the cars you would like to personally see and test drive.
Step-5 Inspect the car for quality check
Once you zero in on the right car suited to your needs and liking, inspect it in person. Look for dents, rust, damage, and tyre condition, as you may have to bear the cost of replacing or fixing them later. Check if the car has been recently painted or given a touch up to hide any flaws. Also, check if the car has the original engine, also look out for any possible leaks. To be extra sure, take a trusted car expert or mechanic with you.
Step-6 Take a test drive
Take the car out for a test drive for at least 15 minutes. Ensure that the vehicle's steering wheel, headlights, brakes and gears are functioning properly. Pay special attention to the noise emanating from the engine, especially at sharp turns, as well as over potholes and bumps. Also try to drive the car at different speeds. See if you like the feel of the car as well as your whole driving experience. Also, test all electronics-auto locking, air conditioner, power windows, and sound system etc.
Step-7 Ask for car's history, prior insurance claims if any
Ask for service and maintenance records of the car from the original vehicle owner. Don't just focus on the car's odometer, but also look at other factors that contribute to its condition. Find out about the car's model and the year of its manufacture. Also, check if the car owner did any major repair work. Check the car's original registration papers (RC book), and read the existing insurance policy. See if any claims have been made against the insurance policy. If the car has an adequate no claim bonus, it should be a good one. Ask for the body repair bills, if the invoice amount is too big, it's not a good deal.
Other documents you will need comprise a valid PUC (Pollution Under Control) certificate and tax documents. Find out when was the car's last servicing done.
Step-8 Get the car inspected
Take the vehicle to an authorised workshop to get it checked and assess if any major repairs need to be done or if there are any hidden flaws in the car. Certified used car dealers also perform these checks, however not all cars with these dealers are certified. Ask them if the vehicle is certified and ask for warranty. If the car is not certified, then get all the above mentioned checks done.
Step-9 Finalise the deal
Negotiate your way to a great deal as there are no standard prices of pre-owned cars in the market. Whether you are purchasing the vehicle from a car dealer or an owner, there is always room for a good bargain. Do your due diligence beforehand by regarding the market price of similar cars.
Step-10 Final paperwork
- Once you seal the deal, the last step is the paperwork or documentation. It includes the following:-
- Registration transfer from the original owner in your name. The documents required in this case are Form-28, Form-29, and Form-30 as well as a sales affidavit.
- Along with these forms your ID proof, address proof, and a couple of passport size photographs would also be required.
- Transaction documentation which includes delivery note, invoice, booking order form, payment receipt, etc.
- Insurance transfer - After the registration certificate (RC) is transferred in your name, you need to ask the insurance company to get the vehicle's insurance in your name. If the RC is transferred in your name and insurance is not, then you will not get any claim from the insurance company.
- PUC certificate: You also need this document which is mandatory to carry with the car. A PUC certificate has a validity of 3-6 months, after which it needs to be renewed. You can get the certificate at fuel stations as they have a PUC booth.