MyLoanCare is a FREE of cost service for borrowers

MyLoanCare - Baat Aapke Interest Ki

MyLoanCare Customer Ratings - 4.5/5.0

Used Car Loan

Used Car Loan Interest Rates, Calculator Sep 2020

Last Updated 23rd Sep 2020

  • Compare and get lowest used car loan interest rates @ 13.75%
  • Maximum loan amount depends upon the market value or depreciated value of the car
  • Maximum loan tenure of used vehicle loan ranges upto 7 years
  • Get best used car loan offers for both salaried and self employed individuals
  • Second hand car loan is available at both fixed and floating rates

Used Car Loan Interest Rates Comparison, Lowest EMI Sep 2020, Best Rates

Bank Car Loan Interest Rates Lowest EMI per lakh for Max TenureMaximum Loan Amount
HDFC Bank Car Loan Rates 13.75% Fixed 7 years 100% of market value
SBI Car Loan Rates 9.75% Floating 5 years 85% of on-road price
ICICI Bank Car Loan Rates 14.25% Fixed 5 years 80% of market value
Kotak Bank Car Loan Rates 17.00% Fixed 5 years 90% of market value
PNB Car Loan Rates 11.20% Floating 5 years 70% of market value
Union Bank of India 11.60% Floating 5 years 50% of market value
Central Bank of India 9.95% Floating 5 years 75% of market value
Andhra Bank 11.85% Fixed 5 years 60% of market value
Federal Bank 11.15% Fixed 5 years 75% of depreciated value
Bank of India 8.90% Floating 3 years 70% of market value
Bank of Maharashtra 9.40% Floating 5 years 50% of market value
Indian Bank 12.25% Floating 5 years 60% of market value
OBC 10.90% Floating 3 years 70% of market value
Bank of Baroda 10.45% Floating 3 years 80%

Second Hand Car Loan

  • Car loans are available for buying a new car, a used car, an SUV or an MUV.
  • SBI, ICICI, HDFC, Kotak, Bank of Baroda, Indian Bank, Bank of India and IndusInd Bank are among the many car loan options available.
  • Car loan schemes of each bank differ in terms of interest rates and other factors like maximum loan amount, loan tenure, EMI, processing fees and prepayment fees.
  • EMI schemes available include 0 interest scheme, advance EMI scheme, reducing balance scheme, fixed rate scheme, floating rate scheme and zero interest schemes.

Features of Used Car Loans

The features of the loans available for Used Car are different from the loans available for the new cars, let’s deep delve into some important features:

  • The process for applying for the Used Car financing is simple and most of the time is identical to the new car loan process.
  • There are very few or no restrictions on applying for a car loan. Any individual with a permanent income can apply for it.
  • The loan offered for the Used Car ranges from 60% to 80% of the on-road price of the car.
  • As the risk associated with the used car loan is higher. So, the rate charged on used car loans is on the higher side and starts from 13.75%.
  • The time period for the payment of Used Car Loan lies up to 7 years.

Eligibility for Availing Used Car Loans

Different banks and financial institutions have different sets of rules applicable for the second hand car loans. However, there are some criteria through which banks gauge the eligibility of the individuals. They are:

  • Age of the Applicant: The age requirement for a used car finance is 21 years to 65 years.
  • Income: An individual must have a regular source of income. The minimum income requirement to get a second hand car loan is Rs. 18,000 for salaried and Rs. 1.5 Lakh per annum for businessmen.
  • Work Experience: Banks ask for a minimum of 1 year of experience in case of salaried individuals and business existence of 3 years for businessmen.
  • Credit Score: A credit score above 700 is considered as a good score for a used car loan.
  • Age of the Vehicle: The vehicle must not be less than 10 years at the time of loan maturity.

Documents Used for Financing Used Car Loan

Documents required to opt for the old car loan are:

  • Identity proof: Aadhaar card, PAN Card, Voter’s ID, Passport, Driving license, etc.
  • Proof of Residence: Aadhaar Card, Electricity Bill, Ration’s Card, Passport, Driving License etc.
  • Proof of Income: Salary slip, Form 16, Bank statements of the last six months, Profit and loss statements, etc.
  • Signature proof
  • Photograph

Car Loan Queries

  • Ex-showroom price is the price of the car including excise duty but excluding local duties and statutory charges.
  • On road price is the price you pay for the car including the ex-showroom price and cost of registration, insurance, octroi, municipal entry tax, road tax and any accessories. The on road price tends to be 15-25% more than the ex-showroom price and may vary from city to city.

Caution - Note that a car loan of 80% of on road price is likely to be more than 95% of ex showroom price.

  • EMI in arrears scheme – this is the standard method of paying EMI where the interest for a month (and principal repayment) is payable at or after the end of the month.
  • Advance EMI scheme – you pay interest and EMI at the beginning of the month. So, each month, you pay interest on the amount that you have already repaid to the bank at the beginning of the month.

Caution – In case your bank charges EMI in advance, the EMI amount should be about 1% lower than that in case of EMI in arrears. For those interested in more precise figures, EMI per Rs. one lakh loan amount on a 60 month car loan at 10% rate of interest as per EMI in arrears method comes to ₹ 2,125 while that as per EMI in advance method comes to ₹ 2,107.

  • Zero interest car loan scheme (also called 0% finance scheme) – this is one of those free lunches that actually doesn’t exist. So, beware of schemes that claim to offer zero interest. It is likely that the car company is offering a subvention scheme whereby the interest is paid by it to the bank upfront. Now, you could always ask the car dealer for the same amount as a cash discount. It’s like padding up the price of the car for the interest amount and marketing it under a nice name.
  • Flat rate of interest car loan scheme – in this method, you pay interest on the entire principal amount of car loan till maturity. So, on a Rs. five lakh car loan at 10% for 5 years, you would have to pay back a total of Rs. five lakhs plus interest of ₹ 50,000 a year, that is a sum total of ₹ 7,50,000. The EMI in this case would be ₹ 12,500.
  • Reducing balance car loan scheme - in this method, you pay interest on the amount outstanding each month. With each EMI, the balance principal amount keeps reducing. So, on a Rs. five lakh loan at 10% for 5 years, you would have to pay back a total of Rs. five lakhs plus interest on reducing basis which comes to ₹ 1,37,411 or ₹ 6,37,411 including principal. The EMI in this case would be ₹ 10,624 a good 15% less than that for a flat rate scheme.

Caution – Never get hoodwinked with the low rate of interest offered on a flat rate scheme. A flat rate of 10% is equal to an interest rate of 18.7% on reducing rate basis on a five year car loan.

FAQs

Does a guarantor required for the used car loans?

It does not apply in most of the cases, but if the person's income is not meeting the minimum eligible criterion, the bank may ask for the guarantor.

What is the maximum tenure for the used car loan repayment?

The maximum tenure for the used car loan is upto 7 years. But it is always advisable to apply for shorter tenure as longer tenure will mean higher interest.

Is there any need for collateral security for a used car loan?

No, there is no such provision as collateral for a pre owned car loan.

Is there any requirement of the down payment in case of a used car loan?

In most of the cases, there is no requirement of the down payment for a used car finance.

What documents are required to apply for used car loans?

Individuals are required to provide identity proof, residence proof, income proof, a signature for applying for used car loans.

Is interest on car loan tax-exempted?

No, unlike home loans, interest on used car financing is not tax free.

Are there any chances of negotiation in the interest rate of the used car loans?

Yes, individuals can negotiate provided they have a good credit score and timely payment history.


*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More