Planning to buy used car on loan? Here're some tips to get the best deal

• Used car loans are much more expensive than new car loans. The difference in interest rates can be 3-7 percentage points

• While a new car only involves taking credit risk on the borrower, lending for a used car is more complicated

• A financier has to come up with the value of the car based on its age, model and kilometres clocked, and how the four-wheeler was used

• Also, when a lender gives a loan for a pre-owned car, it funds a vehicle that is in the name of the previous owner

• If the borrower has a good credit score and a relationship with the bank, he can check personal loan offers

• If the difference between a personal loan and a used car loan is 1-1.5 percentage point, the former is preferable. For a used car, a lender will give a loan of up to 80 per cent of the car value. A personal loan can fund the entire purchase as there’s no restriction on its end use