A used car or a pre-owned car is that vehicle which is being sold for the second or the third time. 
The used car market in India is booming. According to the reports, the ratio of new cars to used cars is 1:2.2, which means that for every 100 new cars sold, 220 used/pre-owned cars come into the market for sale. The annual volume in the used car market is estimated to be 4 million units, which is 50% more than new car sales.
Bankers say that there has been 12-18% rise in the used car loans as well. If you are also planning to buy a used car, here are a few things that you need to focus on. Also in case you are planning to take a loan for a used car.

Reasons for the Growth in Used Car Market

  • Reducing ownership periods
  • Affordability
  • Better availability of platforms for buying and selling of used cars
  • Change in perception 
  • Ownership of more than one car
  • Increased ownership of cars due to cab services
  • Ease in the availability of finance. 

Documents Required

  • Pan Card Number
  • Passport Photo
  • Address Proof
    (Valid Driving License / Valid Passport / Aadhar Card)
  • ID Proof
    (Valid Driving License / Valid Passport / Voter’s ID / Aadhar Card / Pan Card)
  • Car Papers and related documents

 The following are 5 the things that are to be considered in Used Car Loan:

1. The Interest Rate

Getting the best interest deal for your used car loan is not easy. Do your homework on the various loan providers so that you find a deal that suits your needs. Remember, the rate of interest decides the amount you will have to repay, but do not let this be the only deciding factor. There are many other factors, once needs to consider, including credibility of the lender.

2. Documentation

When you are buying a used car, you need to first check all the documents. The RC book needs to be clean. The financial institution would want to know if all the documents of the asset are clear. For instance, what if it is a car stolen the financial institution will not want to take the risk. Banks will evaluate the document and value the car independently as well as based on internal parameters before deciding to lend.

3. Loan Tenure

Nothing is more relaxing than a clearly laid out loan repayment schedule and the possibility to foreclose a loan with minimum charges. You can use this online EMI calculator to know the amount you will have to pay for each month. Try multiple combinations of Loan Amount, Rate of Interest, and Tenure, to arrive at the most suitable EMI.

4. Valuation of the Car

This is the toughest part of financing a used car. A brand-new car comes with a clear price tag, whereas estimating the value of a used car is not easy.

One would have to take into account the number of kilometers driven, the user profile (personal or commercial use), the place of usage (Cars from flood-prone areas may not be preferred), accidents or modifications done on the vehicle and clear title of the car, etc.

5. Loan process and Processing Fees

A car loan provider charges a fee for processing your application and doing the paperwork. This amount depends on the loan amount, the tenure, and the down payment. Seek information about these charges and read the fine print to ensure that you understand all the charges.

Interest Rates

The car loan interest rate on used car loans is a minimum of 13.5%. Interest rate is applicable on individual cases depending on various factors such as

  • Age of car
  • Type of car
  • Credit score
  • Ability to pay back
  • Work experience, age and profession of the borrower


The tenure of the car loan is as follows

  • Up to 5 years
  • Up to 7 years in special cases

The tenure depends on the maximum age of the car at the time of maturity of the loan which is 9 years. For instance, if the age of the car at the time of borrowing is 2 years, then the maximum tenure is 7 years in special cases and 5 years in normal cases.


You are eligible for a used car loan from us if you satisfy the following conditions

  • You are a salaried individual with income of at least Rs 2.5 lakhs per annum
  • You are a self-employed person or a self-employed non-individual with income of at least Rs 2 lakhs per annum

We extend loans on the value of the used car under the loan to value ratio (LTV) principle. Here, the LTV is usually limited to a maximum of 90% but in special cases, it can go up to 100% in respect of select vehicle models and select category of salaried individuals employed in Super Cat A and Cat A company list. Before you decide to apply, check your car loan eligibility.


The following are the features of Used Car loans:

  1. Loan up to 90% value of the used car
  2. Loan up to 100% in special cases
  3. Loan tenure up to 5 years
  4. Loan up to 7 years in special cases
  5. Customized repayment schedules
  6. Choice of EMI plans
  7. Easy to use platform
  8. Car Loan Interest rate at minimum of 13.5%


You can decide the EMI you want to pay depending on your ability to pay and the tenure. The EMI will be lower if the tenure is higher. You can use our car loan EMI calculator to arrive at a comfortable EMI subject to terms and conditions operable at the time of borrowing.