With the surge in global warming and the environmental damage caused by traditional fuel cars, the demand for electric vehicles (EVs) has seen a massive uptick following the Covid-19 pandemic. An inadequate supply of semiconductors and the high prices of new electric vehicles have been causing demand for used electric vehicles or Second-Hand Electric Car to rise.
Why should you choose a used electric vehicle or Second-Hand Electric Car?
- Zero pollutants: Electric vehicles emit zero pollutants and, as such, have no environmental impact.
- Lower depreciation rate: Electric vehicles have lower depreciation rates than traditional fuel vehicles with an internal combustion engine.
- Supply chain disruptions: The supply of new electric vehicles has backlogs due to the lack of availability of semiconductors. A used electric vehicle can be instantly driven away.
Checklist before you buy a Second-Hand Electric Car
- Remaining battery life and range for a used electric vehicle: The battery should be in good condition with substantial life and range. The larger the battery size, the longer the range offered by the battery. You should ensure that the electric vehicle does not die in the middle of the road due to poor battery range.
- Charging infrastructure: Ensure you have or find adequate charging infrastructure for charging the EV battery in and around the city, and at home. Otherwise, check if you have access to battery suppliers that can supply removable batteries.
- Capital and maintenance expenditure: Electric vehicles have a high upfront capital expenditure but a low maintenance cost. See if you are comfortable with the high upfront price and the trade-off with the lower maintenance expense.
Best way to finance the purchase of a used electric car
An electric car’s high upfront purchase price can be financed by taking a used car loan. Car loan financing companies can fund up to 95%, sometimes even 100% of the cost, through a second-hand car purchase loan.
Eligibility for taking a used car loan:
- You are an individual older than 21 or up to 60 years of age.
- You are a salaried or a self-employed individual by profession.
- Your monthly income is Rs.20,000 or more, and you have been in stable employment for one year or more.
- You have a stable business yearly income of Rs.200,000 or more, and have been in business for three years or more.
- Your creditworthiness is established by a positive CIBIL score of 750+.
Lending rates for used car loans
Used car loan interest rates usually depend on various factors, including the cost of funds, customer credentials, geography, tenor, and used car discounts offered in the market.
- Equated monthly instalments (EMIs) on your used car loans:
Used car loan companies offer a fixed EMI or a flexible car loan according to your cash flow. A fixed EMI repayment scheme can be created if you have a fixed income and stable cash flow. On the other hand, if your cash flows are uncertain, a flexible EMI repayment can be customised according to your need.
- Processing of loan documentation:
It usually takes 24-36 hours to process loan documentation before you are sanctioned a used car loan.
- Used car loan interest rates:
Used car loan interest rates start at 15% a year and trend upwards depending on your financial circumstances and the type of used car purchased. The principal and interest charged on a used car loan are payable in the form of EMIs.
- Used car loan interest calculator:
Using a used car loan interest calculator, you can input the principal amount, the interest rate payable, and the loan period to work out the EMI payable. A used car loan interest calculator is handy to work out different applicable EMIs.
- Used car loan processing fee:
A one-time processing fee of 1.75% is charged for processing a used car loan. This fee is non-refundable even if the car loan is not sanctioned.
- What does the used car loan amount cover?
A used car loan covers the purchase price of the Electric vehicle. Sometimes, the registration fees of the vehicle are also covered in this amount. However, insurance is treated as a separate cost.
- Foreclosure charges on premature repayment of the used car loan:
If you have taken a used car loan and wish to prepay the loan, then certain charges are applicable. The foreclosure penalty rates may vary from 7% + GST for payment within six months to 5% +GST if you prepay the loan in 12 months.
- Tax exemptions:
If you are a salaried person and have taken a used car loan, no exemptions are available.
If you are a business person and the car is used for business purposes, exemptions are available. Interest for a year is tax-deductible, and so is depreciation.
- Other charges:
Most used car loan financiers have other charges like bounce charges, charges for various no objection certificates issued by them, and car repossession charges. More information can be obtained by referring to the respective websites.