Used Car Loan: Due to the ever increasing prices of the new car, the demand for second hand or pre-ovned cars has increased rapidly. In view of this demand, now many banks and NBFC are offering used car loans for old trains. This loan is particularly beneficial for those who want to buy a car in a low budget, but they do not have full funds.
How much loan will be received, what will be the interest rate
Banks are offering financial facilities from 80% to 100% of the value of used cars. The loan duration is usually between 1 and 5 years, in some cases it is also given up to 7 years. The interest rate can start from 9% to 17–18%. It depends on the bank, the condition of the car and your credit score.
Who can apply
The applicant should be between 21 and 65 years of age for a used car loan. Also, you should have a stable means of earning. Whether it is salary or your employment. Credit score above 700 is necessary for better interest rate. Apart from this, there should be a work experience of at least 2–3 years.
Which documents will be necessary
Documents like Aadhaar, PAN, Passport, Voter ID will be required for used car loan. Also, salary slip, bank statement or ITR may have to be shown to show income proof. Apart from this, documents related to the vehicle like RC Book, Insurance Paper and Pollution Certificate will also be necessary.
Personal Loan vs used car loan
If you are thinking of taking a personal loan to buy a car used, then it is necessary to compare it with a used car loan. A used car loan is a secure loan, in which the car itself mortgages. At the same time, personal loan is un-score. It has high interest rates, usually from 10% to 24%. However, the process in personal loans is easier and does not require down payment.
Which banks are getting loans
| Lender | Interest rate |
Loan repayment period |
| Punjab National Bank | Starting from 9.40% per year | 5 years |
| Axis bank | 13.55% – 15.80% per year | 5 years |
| Contact the bank | 5 years | |
| 11.75% – 15.25% per year | 5 years | |
| Hdfc bank | 13.75% per year (Rack Interest) | 7 years |
| Kotak mahindra bank | Contact the bank | 5 years |
| Icici bank | 11.25% per year starts | 7 years |
| Karur vysya bank | Starting from 11.45% per year | 7 years |
| Federal bank | Starting 12.00% per year | 7 years |
| Tata capital | Starting from 10.75% per year | 5 years |
Source: Bankbazar.com (till 26 June 2025)
What should be kept in mind before applying
- Compare interest rate, processing fees and conditions.
- Evaluation of vehicle age, condition and value is necessary.
- Understand the documentation and approval process.
- Take care of late fees, prepament charge and additional charges.
If you are planning to buy a car at a lower price, the used car loan can be an easy and affordable option. With correct information and documentation, you can find a fast loan and buy your needs comfortably.
Also read: The owner of the property cannot be made only by the registry, check these documents while buying a house and land