Used Car Loan Interest Rates
Most banks and Non-Banking Financial Companies (NBFCs) offer used car loans at attractive interest rates. The repayment tenure of the used car loan may be up to 7 years.
Lender | Interest Rate | Repayment Tenure |
Starts from 10.75% p.a. | 5 years | |
Starts from 8.90% p.a. | 5 years | |
13.55% p.a. - 15.80% p.a. | 5 years | |
Mahindra Finance | Contact the bank | 5 years |
11.50% p.a. - 15.00% p.a. | 5 years | |
13.75% p.a. onwards (Rack Interest) | 7 years | |
Bajaj FinServ | Contact the bank | 5 years |
Contact the bank | 5 years | |
11.25% p.a. onwards | 7 years | |
9.95% p.a. onwards | 7 years | |
15.30% p.a. onwards | 7 years |
Used Car Loan - Features and Benefits
- Flexible repayment terms are offered by certain lenders.
- The documentation process is simple and minimum paperwork needs to be submitted.
- Depreciation rates and insurance costs are lower for a used car when compared to a new car.
- The loan amount will be less when compared to a new car loan. Therefore, the monthly payments will reduce.
- Up to 90% of the car's value may be provided as a loan.
- It is easy to apply for the loan and most lenders allow you to complete the process online.
- Most banks offer a long repayment tenure.
Factors Affecting Used Car Loan Interest Rates in India
Some of the main factors that affect the used car loan interest rates in India are mentioned below:
- Debt-to-Income Ratio: Your debt-to-income ratio is an important factor that is considered when determining the used car loan interest rate. The ratio determines whether you can pay the EMIs on time. Your application will be rejected, or the interest rates will be high if your debt-to-income ratio is high.
- Repayment Tenure: Lenders offer low interest rates in case you opt for a longer tenure. However, you will end up paying more interest. Even though the interest rates are high for a shorter tenure, the overall amount that you pay for the car will be low. Therefore, it is vital that you check the EMI before opting for the repayment tenure.
- Increase the down payment: Lenders offer loans at low interest rates if you make a high down payment. Your EMIs will also reduce since the principal amount is low. Paying a high down payment also shows lenders that you financially sound and can repay the loan.
- Relationship with Bank: You can contact your current bank before choosing any other lender. Lower interest rates may be provided if you have a good relationship with the bank. The interest rates can also be negotiated with your current bank.
- Vehicle Age and Model: No security will need to be provided when availing a used car loan. If the monthly payments are not made, the car will be seized by the lender. Therefore, the age and model of the car is taken into account when the interest rates are determined. Lower interest rates are provided for newer cars. Interest rates may also be low if the car is from a reputed manufacturer.
- Income: Lenders check your income when they determine the interest rates. Individuals with a steady income and a stable occupation may be provided a used car loan with a low interest rate. The company you work for is also considered when determining the interest rates.
- Credit score: One of the most important factors that is considered when determining the interest rates is your credit score. The credit score also determines whether you will be eligible to avail a used car loan. Individuals with a good credit score are provided loans with a lower interest rate. Your loan application will be rejected, or the interest rates will be high if the credit score is low.
Additional Charges on Used Car Loans
Some of the miscellaneous charges that may be levied when you avail a used car loan are mentioned below:
- Depending on the state, a fee may be levied for the bill of sale to be notarised.
- Taxes may be levied.
- Ensure that a valid insurance cover is available and the necessary documents are provided.
- A fee will be levied to change the registered owner.
- Depending on the bank, a processing fee may be levied.
Used Car Loan EMI Calculator
If you wish to calculate the monthly payments, you can use the car loan EMI calculator offered by BankBazaar. Apart from being easy to use, the calculator helps in saving time as well.
Details such as the rate of interest, loan amount, processing fee, and repayment tenure must be entered to calculate the EMI. The details will be displayed almost immediately.
Things to Know Before Applying for a Second Hand Car Loan
Some of the important things that must be considered before you purchase a used car are mentioned below:
- Car Insurance: Check what type of insurance the car is covered under. You can opt between third-party insurance and comprehensive insurance.
- Registration Certificate: Ensure that the registration certificate is verified. The name of the owner, the chassis number, and engine number must be mentioned on the registration certificate. Apart from the RC, the pollution certificate and road tax receipt must be checked.
- Service Records: Check the service records of the vehicle. Make a note of the number of times the car has been serviced. Check if there have been any major issues with the car.
- Condition: It is vital that you check the interior, exterior, framing, engine, tyres, and mileage of the car. Test drive the car before you purchase it.
FAQs on Used Car Loan Interest Rates
- Is it mandatory to provide a guarantor when I avail a used car loan?
No, it is not mandatory to provide a guarantor when you apply for a used car loan. However, if you do not meet the credit criteria, the lender may ask for a guarantor to be provided.
- Will there be any charges levied in case I prepay the car loan?
Yes, lenders usually charge a certain amount if you prepay the used car loan. Depending on the bank, the charges will vary.
- Who can avail a used car loan?
A used car loan can be availed by Hindu Undivided Families (HUFs) and Trusts, Private and Public Ltd. Companies, Partnership firms, self-employed individuals, and salaried employees.
- Do I have to provide collateral or security when I avail a used car loan?
No, you need not provide collateral or security when you avail a used car loan. The car acts as security.
- What are the different methods by which the loan can be repaid?
The different methods by which the loan can be repaid are ECS, Direct Debit, and Post-Dated Cheques.
- Do banks and NBFCs provide the option to apply for a used car loan online?
Yes, certain banks and NBFCs provide the option to apply for a used car loan online.
- Do banks levy a processing fee in case I avail a used car loan?
Yes, a processing fee will be levied by banks and NBFCs in case you avail a used car loan.
- Do banks and NBFCs provide the option to preclose the used car loan?
Yes, banks and NBFCs provide the option to preclose the used car loan.
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