In the era of free-spending market driven by steady arrival of newer products, used cars continue to attract its share of customers.
While a good section of people find used-cars as a smarter option, some feel that the market still needs to be more structured and transparent. “A large number of people are seeking used cars because they think it is affordable. But funding is a problem for most of the people who buy such cars,” said K.Ravi Shankar, a dealer of used cars.
Concurring with him, G.Anbarasu, a customer says, “It is very hard to get loans from banks for used cars. I have decided to buy an used car with my savings.”
People may prefer used cars because the price depreciation is around 30 per cent in the first year. However the NPA for loans in the car segment is more and the risk higher. Some banks are not even able to recover 50 per cent of the loan amount from defaulters. So the rate of interest is four per cent higher than that of used cars, according to A.Rajan, an official of a public sector bank. “Our branch has disbursed less than five loans for used cars in the last one year,” he added.
“The used car market in Chennai is definitely becoming more organised when compared to other cities,” said Mr. Ravi Shankar. As there is a possibility of buying stolen cars from unknown dealers, people prefer to buy cars from reputable dealers who would sometime agree to take the car if its develops any snag at a later stage, he said. As cars are considered a status symbol, some people find value in purchase of used luxury cars. For example, buying an used Honda Accord for Rs.8 lakh instead of buying a mid-segment car would give more satisfaction to many customers, dealers say.
The market has been improving and more choices are available for used car buyers, says Ravi Kumar, a dealer of used cars. With second hand cars being the choice of people who learn to drive, the sales this year has improved by 30 per cent, he says.