Key takeaways
- Published starting rates on loan providers' own sites begin at 8% (Mahindra Finance). Your offered rate depends on your credit profile, the car's age and the loan provider.
- The loan provider usually lends against its own valuation of the car, not the price you agreed with the seller, so a down payment is normal.
- Most loan providers cap the car's age, either at purchase or when the loan would end. The cap differs by loan provider, so ask for it in writing before you pick a car.
- Buying from a registered dealer or a private owner both work, but a private sale needs more care with the RC transfer and the seller's own loan, if any.
- Since 1 January 2026, RBI's directions bar prepayment charges on floating-rate loans to individuals for non-business use. Many car loans are fixed-rate, so check yours.
What is a used car loan?
A used car loan is money a bank or finance company lends you to buy a second-hand car. You repay it in equal monthly instalments (EMIs) over a fixed number of years. Until the last EMI is paid, the loan provider's name stays on the car's registration certificate (RC) as the financier, and you cannot sell the car without clearing the loan. That arrangement is called hypothecation, and it is the same as on a new car loan.
What differs is the loan provider's risk. A new car has a known price and a clean history. A used car has an age, a mileage, a service record and sometimes a paperwork problem. Loan providers price that uncertainty into the loan, which is why used car loans usually carry a higher rate, run for fewer years and finance a smaller share of the price. If you are choosing between buying new and buying used, read used car loan vs new car loan before you commit.
You can borrow from a bank, from an NBFC (a non-bank finance company), or through the finance desk of a dealer that works with them. The route matters less than the terms: the rate, the fees, the tenure, and the loan provider's rules on how old the car can be. Each is explained below, with the figures loan providers publish on their own websites.
How a used car loan differs from a new car loan
| What you compare | Used car loan | New car loan |
|---|---|---|
| Interest rate | Usually higher; the loan provider is pricing age and condition risk | Usually lower; the car is new and the dealer network is established |
| Tenure | Usually shorter, and it shrinks as the car gets older | Usually longer |
| Loan amount | Based on the loan provider's valuation, often below the full price | Often a high share of the on-road price |
| Car age | Loan providers set a maximum age, at purchase or at loan end | Not applicable |
| Valuation | The loan provider's valuer inspects or assesses the car | Not needed |
| Paperwork | RC transfer, seller's NOC if the car has a loan, Form 29 and 30 | Dealer handles registration |
| GST | None on a sale between two individuals. A registered dealer pays GST on its margin, which is built into the price | GST is part of the on-road price |
The table describes how these loans commonly work. Each loan provider sets its own terms, so use it as a checklist of questions, and read the full comparison in Used car loan vs new car loan.
Used car loan rates, tenure and fees by loan provider
These are the figures each loan provider shows on its own website for used (pre-owned) car loans. They are starting points. The rate you are offered depends on your credit score, income, the car and the loan provider's own risk view.
| Loan provider | Published rate | Maximum tenure | Processing fee | Source |
|---|---|---|---|---|
| Axis BankPrivate bank | Not published | Up to 60 months (per Axis Bank calculator) | Not published | axis.bank.in |
| Bajaj FinanceNBFC | 10% - 18.25% p.a. | 12-84 months | Up to 2.95% of loan amount (incl. taxes) | bajajfinserv.in bajajfinserv.in |
| Bank of BarodaPublic sector bank | Floating 10.20% - 12.95%; fixed 11.90% - 14.65% | 60 months (vehicle age + tenure max 96 months) | 0.50% of loan + GST (min Rs 2,500, max Rs 10,000) | bankofbaroda.bank.in |
| Canara BankPublic sector bank | Not published | 60 months | 0.25% (min ₹1,000, max ₹5,000) + GST | canarabank.bank.in |
| CholaNBFC | 15% - 28% p.a. | 5 years | 0.5% - 3.25% + sourcing fee Rs 1,000 - 2,500 | cholamandalam.com files.cholamandalam.com |
| Federal BankPrivate bank | 10.15% - 14.00% | 60 months | 1% of loan (min ₹5,000, max ₹2,50,000) | federal.bank.in federal.bank.in |
| HDFC BankPrivate bank | 9.50% - 17.00% | Not published | Up to 1% of loan (min Rs 3,500, max Rs 9,000) | hdfc.bank.in |
| Hero FinCorpNBFC | 11.5% - 26% p.a. | 60 months | Up to 4% | herofincorp.com herofincorp.com |
| ICICI BankPrivate bank | From 9.75%; Q1 FY27 disbursed range 9.75% - 16.90% | Up to 84 months | 2% of loan, max Rs 20,000 + GST | icici.bank.in icici.bank.in |
| IDFC FIRST BankPrivate bank | From 11.99% | 7 years (repurchase) | Up to 5% of loan amount (incl. GST) | idfcfirst.bank.in idfcfirst.bank.in |
| IndusInd BankPrivate bank | Not published | 84 months* | Not published | indusind.bank.in |
| Mahindra FinanceNBFC | 8% - 25% p.a. | 5 years | Up to 2% of sanction amount | mahindrafinance.com media.mahindrafinance.com |
| Punjab National BankPublic sector bank | From 9.45% floating / 10.45% fixed | 60 months | Not published | pnb.bank.in pnb.bank.in |
| SBIPublic sector bank | 10.45% - 15.60% | Up to 5 years (10 years minus vehicle age) | 1.50% of loan + GST (min Rs 3,000, max Rs 10,000 + GST) | sbi.bank.in sbi.bank.in |
| Tata CapitalNBFC | From 10.49% p.a. | 72 months | Up to 2.95% of loan amount | tatacapital.com tatacapital.com |
| TVS CreditNBFC | Up to 30% p.a. | 12-60 months | Up to 5.9% (schedule of charges) | tvscredit.com tvscredit.com |
| Union Bank of IndiaPublic sector bank | 11.60% - 11.70% | Not published | Flat ₹1,000 | unionbankofindia.bank.in unionbankofindia.bank.in |
| Yes BankPrivate bank | Not published | Not published | Not published | yes.bank.in |
Checked 4 October 2026 on each loan provider's own website. "Not published" means the loan provider does not show that figure on the page we checked. We never estimate one. A starting rate is the best case, not the rate you will necessarily be offered.
For the full table with prepayment terms and the sources, see used car loan interest rates by loan provider. To put two or three of these loan providers side by side across every loan type, use the bank comparison tool or the vehicle loan comparisons.
Who can get a used car loan?
Most salaried and self-employed adults with a steady income and a clean repayment history can apply. Loan providers commonly look at five things: your age at the start and end of the loan, your income and job stability, your credit score and history, the EMIs you already pay, and the car you want to buy. Each loan provider sets its own thresholds, and some NBFCs lend to people banks decline, usually at a higher rate.
The one rule worth remembering is the EMI-to-income limit. Loan providers often prefer your total monthly EMIs, including the new car loan, to stay within roughly 40 to 50 per cent of your net monthly income. Try your own numbers in the used car loan eligibility calculator, and read the full eligibility guide for age, credit score, and what to do if you have been turned down.
Documents you will need
You need two sets of papers: yours, and the car's. Yours are identity and address proof, income proof (salary slips and bank statements if you are salaried, income tax returns and statements if you are self-employed) and passport photographs. The car's are the RC, a valid insurance policy, a pollution-under-control certificate, and, depending on the loan provider, a valuation report and the sale agreement or invoice. If the seller still has a loan on the car, you also need their loan provider's NOC.
The exact list changes by loan provider and by whether you buy from a dealer or an individual. The document checklist lists both, and explains why the car papers hold up more used car loans than the borrower's papers do.
How much loan will you actually get?
This is where used car loans surprise first-time buyers. You agree a price with the seller, say ₹6,00,000. The loan provider then values the car, and lends against its valuation or the price, whichever is lower, and usually not all of it. The gap is your down payment. If the valuer puts the car at ₹5,50,000 and the loan provider finances a share of that, you pay the difference between the price and the loan from your own money, plus fees, insurance and any RC transfer cost.
Every loan provider sets its own loan-to-value ratio and it moves with the car's age, so no single percentage is right. Budget for a meaningful down payment, and ask for the loan amount in writing before you pay the seller anything. The down payment guide walks through a worked example.
What a used car loan costs each month
EMIs rise quickly with the rate and fall with the tenure. This table shows the monthly EMI on three loan amounts at three example rates over four years, so you can see how much a few percentage points move your budget.
| Loan amount | EMI at 10% | EMI at 13% | EMI at 16% |
|---|---|---|---|
| ₹3,00,000 | ₹7,609 | ₹8,048 | ₹8,502 |
| ₹5,00,000 | ₹12,681 | ₹13,414 | ₹14,170 |
| ₹8,00,000 | ₹20,290 | ₹21,462 | ₹22,672 |
Illustration over 4 years with the rates shown. These rates are examples for the arithmetic, not offers. Your loan provider decides the rate.
Use the used car loan EMI calculator for your own price, down payment and tenure, or the general car loan EMI calculator. The rates above are for the arithmetic. They are not offers.
Used car loan EMI per ₹1 lakh
Used car loans usually carry higher rates and shorter tenures than new car loans. Multiply the figure in the table by the number of lakhs you borrow. For example, a ₹5 lakh loan at 14% over 3 years has an EMI of about ₹17,100.
| Interest rate | 1 year | 3 years | 5 years |
|---|---|---|---|
| 11% | ₹8,838 | ₹3,274 | ₹2,174 |
| 14% | ₹8,979 | ₹3,418 | ₹2,327 |
| 17% | ₹9,120 | ₹3,565 | ₹2,485 |
| 20% | ₹9,263 | ₹3,716 | ₹2,649 |
Monthly EMI per ₹1,00,000 borrowed, reducing-balance method. These rates are examples for the arithmetic, not offers. Processing fees, GST and insurance are extra. Use the used car loan EMI calculator for your own numbers.
How to get a used car loan, step by step
- Set a budget from the EMI, not the price. Decide the EMI you can pay comfortably, then work back to a loan amount. The eligibility calculator does this.
- Check your credit report. A wrong entry or an old overdue amount can cost you a rate point or a rejection. Fix errors before you apply.
- Shortlist the car and ask for its papers. The RC, insurance, service record and, if there is a loan on it, the seller's loan provider and the foreclosure amount.
- Compare two or three loan providers. Ask each for the rate, the processing fee, the maximum car age and the Key Fact Statement. The rates page and the comparison tool help.
- Apply with the car details. Most loan providers want the car's registration number, make, model, year and price at the application stage.
- Valuation and approval. The loan provider's valuer checks the car and the loan provider sets the loan amount.
- Sign, pay the seller, transfer the RC. The loan provider usually pays the seller directly. You complete the RC transfer and hypothecation with the transport office.
- Insure the car and keep your documents. Comprehensive cover is normally a condition of the loan.
Dealer, certified programme or private seller?
You can buy a used car from a registered used-car dealer, from a certified pre-owned programme run by a manufacturer or a large platform, or from a private owner. All three can be financed. The differences are in the paperwork and the risk.
A dealer or certified outlet usually handles the RC transfer, has the car's papers in order and often has a loan provider tie-up that can speed approval. A private sale can be cheaper, but you must check the seller really owns the car, that any existing loan is cleared and the hypothecation is removed, and that you file the transfer on time. A loan provider may also be stricter on a private sale. Read financing a used car from a dealer or a private seller before you pay an advance.
Valuation, inspection and the car's age
Before it approves the loan, the loan provider wants to know what the car is worth and how long it will keep that worth. It values the car from its make, model, year, mileage, condition and market price, often through an empanelled valuer. A car that looks cheap but needs repairs, or has been in a major accident, can come back with a lower valuation and a smaller loan.
Age matters twice. Many loan providers refuse cars above a certain age at purchase, and many also cap how old the car can be when the loan ends. A five-year-old car with a six-year loan can fail the second test even if it passes the first. The car age limit guide explains how to check this before you fall in love with a car.
After approval: RC, hypothecation and insurance
Once the loan is sanctioned, the car's ownership moves to you and the loan provider's charge is recorded on the RC. In practice that means the seller files a transfer notice, you apply for the transfer in your name within the time the Motor Vehicles Act allows, and the loan provider's hypothecation is entered on the new RC. When you repay the last EMI, the loan provider gives you a No Objection Certificate and you apply to have the entry removed. Skipping that last step is the most common reason people struggle to sell a car years later.
The loan provider will also want comprehensive insurance in force, with the policy transferred to your name. The forms, deadlines and who does what are set out in the RC transfer and hypothecation guide.
Can you close the loan early?
Yes, but what it costs depends on the type of rate. From 1 January 2026, RBI's pre-payment directions bar banks and NBFCs from charging prepayment fees on floating-rate loans to individuals for non-business purposes. Many car loans, though, are fixed-rate, and the directions leave fixed-rate loans to the loan provider's own policy. So read the foreclosure clause in your sanction letter, and ask the loan provider for the exact amount to close the loan before you decide. The full explanation, with the table of what loan providers publish, is in the prepayment and foreclosure guide.
Pros and cons of a used car loan
Why it can make sense
- A good used car costs much less than a similar new one, so the loan and the EMI are smaller.
- The steepest depreciation has already happened, so you lose less value in the first years.
- A secured loan is usually cheaper than an unsecured personal loan for the same amount.
- You can finance a car the new-car loan providers would not look at.
What to watch
- The rate is usually higher and the tenure shorter, so the EMI per lakh can be higher than on a new car loan.
- The loan provider may lend only a part of the price, so you need more cash up front.
- Hidden condition problems and paperwork gaps become your problem after purchase.
- An older car can mean higher repair and insurance costs through the loan.
Mistakes that cost borrowers money
- Paying the seller before the loan is approved. If the valuation comes in low or the car fails the age rule, you are stuck with a car and a gap.
- Comparing only the headline rate. A lower rate with a high processing fee and valuation charges can cost more overall. Compare the APR and the total repayable amount in the Key Fact Statement.
- Taking the longest tenure by default. It lowers the EMI but raises the interest, and on an older car the loan can outlast the car's useful life.
- Ignoring the seller's loan. A car with an unreleased hypothecation cannot be transferred cleanly. Get the loan provider's NOC and the Form 35 trail.
- Buying add-ons through the loan. Insurance and extended warranty rolled into the loan raise the amount you pay interest on. You can usually buy insurance separately.
- Forgetting to clear the hypothecation after the last EMI. Collect the NOC and have the entry removed from the RC.
Used car loan vs other ways to pay
| Option | Good for | Watch out for |
|---|---|---|
| Used car loan | Most buyers; the car secures the loan so rates are usually lower than unsecured loans | Car age rules, valuation, hypothecation |
| Personal loan | A car the loan provider will not finance, or a quick cash purchase from a private seller | Usually a higher rate and a shorter tenure. See used car loan vs personal loan |
| New car loan | If your budget stretches to a new car | Higher price, faster depreciation. See used vs new |
| Savings | No interest cost at all | Leaves you without an emergency buffer |
Used car loan by loan provider
Open any loan provider below for its own used car loan page, or put loan providers side by side.
Bank of Baroda
Public sector bank · Floating 10.20% - 12.95%; fixed 11.90% - 14.65%
ICICI Bank
Private bank · From 9.75%; Q1 FY27 disbursed range 9.75% - 16.90%
Punjab National Bank
Public sector bank · From 9.45% floating / 10.45% fixed
Union Bank of India
Public sector bank · 11.60% - 11.70%
Compare any two or three banks or see the vehicle loan comparisons.
Used car loan in your city
Loan providers work the same way across India, but branches, valuers and processing times differ by city. Find your city and the loan providers that finance used cars near you.
Official sources and how we checked
Loan provider rates, tenure and fees on this page come from each loan provider's own website, checked on 4 October 2026. General rules come from the sources below.
- Axis Bank: axis.bank.in
- Bajaj Finance: bajajfinserv.in · bajajfinserv.in
- Bank of Baroda: bankofbaroda.bank.in
- Canara Bank: canarabank.bank.in
- Chola: cholamandalam.com · files.cholamandalam.com
- Federal Bank: federal.bank.in · federal.bank.in
- HDFC Bank: hdfc.bank.in
- Hero FinCorp: herofincorp.com · herofincorp.com
- ICICI Bank: icici.bank.in · icici.bank.in
- IDFC FIRST Bank: idfcfirst.bank.in · idfcfirst.bank.in
- IndusInd Bank: indusind.bank.in
- Mahindra Finance: mahindrafinance.com · media.mahindrafinance.com
- Punjab National Bank: pnb.bank.in · pnb.bank.in
- SBI: sbi.bank.in · sbi.bank.in
- Tata Capital: tatacapital.com · tatacapital.com
- TVS Credit: tvscredit.com · tvscredit.com
- Union Bank of India: unionbankofindia.bank.in · unionbankofindia.bank.in
- Yes Bank: yes.bank.in
- RBI: Key Fact Statement for retail and MSME loans
- RBI (Pre-payment Charges on Loans) Directions, 2025, in force from 1 January 2026
- Parivahan: vehicle registration, transfer of ownership and hypothecation services
- GST portal: rules on supply of used vehicles
Method: we show only figures we could read on loan providers' own pages, and "Not published" where they do not publish one. Illustrations are arithmetic on example inputs, labelled as such. Read our editorial policy, how we make money and tell us about an error.
Vehicle loans by loan provider and by brand
Published rates, tenure and fees from each loan provider's own website, and finance options for each vehicle brand.
By loan provider
By brand
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Rates, processing fees, tenure and pre-closure terms side by side, taken from each loan provider's own website.
Frequently asked questions
What is the interest rate on a used car loan in India?
Loan providers' own websites show starting rates from 8% (Mahindra Finance). The range is wide and the rate you are offered depends on your credit score, income, the car's age and the loan provider. Always compare the APR and total repayable amount in the Key Fact Statement. Checked 12 October 2026.
How old a car can I get a loan for?
Loan providers cap the car's age, either when you buy it, when the loan ends, or both. The cap differs by loan provider, and by whether you buy from a dealer or a private seller. Ask each loan provider for its limit in writing before you choose a car.
How much of the price will a loan provider finance on a used car?
It depends on the loan provider, the car's age and your profile. Loan providers generally lend against their own valuation of the car, or the price if it is lower, and not always all of it. Plan for a down payment and the fees on top.
Can I get a used car loan from a private seller?
Often yes, but the loan provider will check the seller's ownership, the RC and any existing loan on the car, and it may be stricter than for a dealer purchase. You must complete the RC transfer on time and have the loan provider's charge noted on the RC.
Is there GST on a used car?
A sale between two individuals does not attract GST. A registered dealer pays GST on its margin, which is built into the price you pay. Ask the dealer to show how the price was set.
Which documents are needed for a used car loan?
Your identity, address and income proof, plus the car's RC, insurance policy, pollution certificate and, depending on the loan provider, a valuation report and the sale agreement. If the car has an existing loan, you need the seller's loan provider NOC.
What is the maximum tenure for a used car loan?
The longest tenure published on a loan provider's own site here is 7 years (Bajaj Finance, ICICI Bank, IDFC FIRST Bank and IndusInd Bank), but tenure on a used car usually reduces as the car gets older. Check the loan provider's rule for your car.
Can I prepay a used car loan without a penalty?
From 1 January 2026, RBI bars prepayment charges on floating-rate loans to individuals for non-business purposes. Many car loans are fixed-rate, and for those the loan provider's own policy applies. Read the foreclosure clause before you sign.
Is a used car loan better than a personal loan?
Usually, yes, because the car secures the loan, which tends to mean a lower rate and a longer tenure than an unsecured personal loan. A personal loan can still make sense if the car is too old for a car loan or you need speed.
Does my credit score matter for a used car loan?
Yes. A better score generally gets a better rate and a higher chance of approval. Check your credit report for errors before you apply and avoid applying to many loan providers at once.
Is the loan provider's valuation the same as the price I pay?
No. The valuation is the loan provider's own estimate of the car's worth. Loan providers lend against the lower of valuation and price, so a low valuation shrinks your loan and raises your down payment.
What happens to the RC when I take a loan?
The registration moves to your name and the loan provider's hypothecation is noted on the RC. After you repay, the loan provider issues an NOC and you apply to have the entry removed.
Is KhatuLoans a loan provider?
No. KhatuLoans is an information and comparison site. We do not lend, and we are not paid by the loan providers named here to rank them. Read our editorial policy and how we make money.
What is the EMI on a ₹5 lakh used car loan?
At 13% a year, the EMI on a ₹5 lakh used car loan is about ₹13,400 over 4 years and about ₹11,400 over 5 years. Used car rates usually run higher than new car rates, so your own EMI may be different. Processing fees, GST and insurance are extra.
What is the EMI per ₹1 lakh on a used car loan?
At 14% a year, the EMI is about ₹3,418 per ₹1 lakh over 3 years and about ₹2,327 over 5 years. Multiply by the number of lakhs you borrow to estimate your own EMI.
Can I take a loan against a car I already own instead?
Some loan providers offer a loan against a car you already own, based on its valuation. You keep using the car and the hypothecation is recorded on your RC. It is a different product from a used car loan, with its own rate and charges, so compare both before you decide.
KhatuLoans is not a loan provider and is not paid by the loan providers named here to rank them. Rates, fees and eligibility change; always confirm with the loan provider. Read our editorial policy and how we make money.