Vehicle Loan - Used Car Loan

What is used Car loan

A used car loan is a type of financing used to purchase a pre-owned vehicle, allowing the buyer to pay for the car in installments over a set period instead of paying the full amount upfront. These loans are offered by banks and financial institutions, and they are secured by the car itself, meaning the vehicle serves as collateral.  

Used Car segments are -

SALE PURCHASE – Sales Purchase is for customers who wants to avail loan to purchase used car.

REFINANCE – Refinance is for customer who would like to avail loan on their owned car.

BALANCE TRANSFER (BT) – BT is for customer who would like to transfer the remaining amount of his existing Car loan from one lender to another.

Key features

• Financing for pre-owned vehicles: A used car loan is specifically designed for buying a second-hand car. 
• Repayment in installments: The loan is repaid through fixed monthly payments (Equated Monthly Instalments or EMIs) over an agreed-upon term. 
• Secured loan: The loan is secured by the vehicle, meaning the car is used as collateral. 
• Eligibility: Lenders consider factors like your income, credit history, age of the vehicle & valuation when approving the loan. 
• Loan amount: The amount you can borrow typically depends on the car's value, your financial profile, and the lender's policies. 
• Variable rates: Interest rates and loan tenures can differ from bank to bank. 

How Does It Work

• Purpose: Funds the purchase of a new or used car for personal or business use.
• Collateral-Based: The car is hypothecated to the lender, who holds a lien on the vehicle’s registration until the loan is repaid.
• Loan Amount: 60–80% for used cars, depending on the lender and vehicle condition & bank Valuation.
• Repayment: Paid through EMIs over 1–5 years.
• Disbursal: Funds are typically disbursed directly to the dealer or seller a/c, subject to clearance of PDD’s.

Documents Required

• Identity Proof: Aadhaar Card, PAN Card, Passport, Voter ID, or Driver’s License.
• Address Proof: Utility bills, Aadhaar Card, Passport, or rent agreement, Voter ID, Driving License.
• Income Proof: For salaried: 3–6 months’ salary slips, Form 16, 1–2 years’ ITRs. For self-employed: 2–3 years’ ITRs, profit and loss statements, balance sheets.
• Vehicle Documents: For used cars: registration certificate (RC), insurance policy.
• Bank Statements: Last 3–6 months’ statements showing financial transactions.
• Others: Loan application form, recent photographs, business registration documents (if applicable), any repayment.

Please Note –

Funding for Purchase of used car with Commercial registration is not permitted.