Second-hand car? What you must check

Buying a second-hand car has become hassle-free, courtesy the presence of corporate players like Maruti Suzuki's True Value and Mahindra and Mahindra's First Choice.

Others like Hyundai Motors and Ford India also sell used cars through their dealers. These even provide a one-year warranty and some free services.

But the buyer of a second-hand car needs to be aware of some things.

Varun Anand was surprised to find two cars - a 12-year BMW and a 14-year old Mercedes - going for less than Rs 4 lakh. When Anand checked the cars, he realised that one owner had replaced the engine with a local one.

Being aware of a few key parameters will help you get a value-for-money deal. First, look at all the papers. Match the information on the papers with the one on the car. Four important things to match are the registration number, chassis number, engine number and colour.

If the car is over 15 years old, check the fitness certificate. The log of service history is another document that will help you judge the car. "Maintenance of service history deserves a premium," said Jayesh Jagasia, who used to run a used car verification and certification company, VeriCar.

Doors: To get a better value for their vehicle, many owners do basic repairs before selling the car. This includes covering scratches and dents. So, look for consistency of paint. Patches of irregular paint could mean repair for scratches or dents. "Such work brings down the price of the car," said Jagasia. The paint could also be done to cover rusting. The buyer should further check the underside of the vehicle and wheel wells for signs of rust. In case of rust, point it out to the owner and renegotiate the price. For a small car, a basic repair for rust can start at Rs 3,000 (for anti-rust coating) and go as high as Rs 10,000 (with a paint job).

Air-conditioner: Switch it on to assess if it cools well and does it quickly. In case of a problem with the AC, the repair cost can vary from Rs 1,500 (for gas issues) to over Rs 6,500 (for changing the condenser) for a small car.

Tyre: Check tyres for wear and tear. Replacing one bald tyre can cost you Rs 2,500-4,500 for small and medium segment cars. Tyres not worn out evenly can indicate misalignment. In this case, a repair can take Rs 1,000-1,200.

Suspension: If the paperwork and exteriors are satisfactory, move on to the mechanical aspects. Take a test drive. If the vehicle does not absorb jerks and jolts while passing over potholes, the suspension needs repair. Such work can cost at least Rs 5,000 and can go as high as Rs 15,000 (in case of excessive damage).

Brakes and clutch: The brake should not squeal and must stop the car in a sufficiently short distance. The cost of repair can range from Rs 2,500 to over Rs 15,000 in case parts such as brake boosters need replacement. Check clutch plates, too. In case of burnt ones, the cost of mending can be Rs 6,000-6,500.

Engine: This is the most important aspect. Start by checking oil quality and consumption. While taking a test drive, keep an ear on the engine sound. Knocking, tapping or rattling noises indicate excessive wear of internal engine parts. Any problems with the engine, look for another car.

There are chances that you may come across a car that satisfies you on all these parameters but the manufacturer has discontinued the model. The running cost of such a car may put a strain on your wallet as spares may be expensive.

While these checks can give you basic understanding of the car, experts said it was always advisable to take a trusted mechanic to judge a used car. "A mechanic can understand essential areas such as the condition of an engine and if the car has an accident history. The feedback can help you negotiate better," said a Maruti car dealer.

Financing your used car purchase

The interest rate for a used car is high, compared to a new one. The State Bank of India (SBI) rate is around 15 per cent and HDFC Bank around 18 per cent. Mahindra First Choice have tied up with banks and offers loans from Mahindra Finance, too. But, this is slightly expensive than other banks, informed an executive at the showroom.

Every bank has its own restrictions on lending for a used car. Most of the bank finance excludes registration-related cost. This means a person would need to spend from his pocket for transferring the vehicle. If the car belongs to another state, the buyer will need to shell out extra for octroi and other charges.

Further, the borrower will need to pay 0.5 –1 per cent of the loan as processing fees.

The repayment period for most banks, like HDFC Bank, is restricted to five years. SBI is one of the very few banks giving loans for seven years, too. However, the rate of interest may increase with a higher loan tenure.

Finance companies have restriction on the age and model of cars, too. SBI does not lend for cars older than five years. HDFC Bank lends if the car is less than 10 years old. And, lenders do not finance for car models that manufacturers have discontinued.

Getting the right dealer

Your mechanic's garage is not the only place to check if you want to buy a used car. Almost all car manufacturers are foraying into the second-hand car market. Over 100 checks are done on a used car before it is put on sale. The cars also come with free services (around three in the first-year alone) and a year's warranty on engine, gearbox and suspension.

Corporate dealers procure cars that satisfy certain parameters. For example, a car should be less than seven years old. Vehicles that have met accidents or were damaged in floods are rejected. However, all these services involve money and they tend to push the car's cost up.

Also, small dealers act like brokers. Sellers bring their car and put these on sale at their showrooms. They hard-sell the vehicle for a commission without doing any checks on it. But, the scope for negotiation with an unorganised player is much more than with a corporate dealer.

The latter would only give small discounts, such as free registration and insurance or may offer a cash discount of Rs 7,000–10,000, depending on the car.

Also, in some cases, an unorganised player can work out to be cheaper, offering the same quality as the organised one. Always take along either a reliable mechanic or a car expert to evaluate the condition of the four-wheelers displayed.