Used Car Loan Financing, Interest Rate & Schemes in India

When you need to buy a car first thing that comes in front of you is cash. Nowadays money shortage is not a problem because of established banking systems. Many banks offer a handful of loan schemes even to buy a used car, that is affordable for the commoner too. Because most of the people rely on used cars than the newer one. So applying loan for a used cars is not a big deal, but you have to clarify certain things before to do so.

used car loans

car loan

As we discussed above there are plenty of sources to lend money to buy a used car. Usually, used car loans can cover 75% – 90% of the total amount of the expense. But the lending amount will differ in every bank.

About applying loan for used car

Before applying for a loan you need to acknowledge the availability of the bank where you are going to apply. And should have a caution on the type and the needs of the loan. First, select a car according to your budget and satisfaction.

The banking loans based on the age of the car from manufacturing and model of the cars. But choosing the current model and newly designed one will assure an easy access to bank loans. After selecting the model, you need to calculate the whole amount that you are going to spend on that car. Because that will help you to calculate the loan amount to apply. If the advance money will be a higher amount means you have to arrange the cash before buying the car. After choosing the loan schemes you need to keep an eye on tenure and instalment plans, whether it is the monthly or periodic basis.

You have to preplan on your income and future plans before applying for the loan. By settling down these issues will reduce further issues. Also helpful to choose the appropriate loan. Then you need to choose the bank that fulfils your requirements. In a bank, they require the authorization and attested proofs of the car purchase and the earnings of the loan applicant. Even you need to clarify your doubts regarding the certificates that require the succeeding actions. Because the procedures differ in banks. If everything has finalised and affordable means you can apply and get the loan from that bank.

There are many banks and financial organizations will provide the loan for used cars. Those banks and facilities are listed below.

State Bank of India

get car loan

SBI bank is a trustworthy one while comparing with other Private Sector banks. Even in SBI bank, the auto loan interest rates are very less from 2011 till now.

  1. Lowest car loan EMI – Rs.1619 / 1 lakh also an extended EMI for 7 years. Also, the loan rates will differ for men and women. 5% of the loan amount taken as processing fees.
  2. Loan on the certified used car – 12.15%. And additional processing fees 5%. The interest rate for the trustworthy male customers is 9.95%, for women, it is 9.9%.
  3. Interest rates are same in all tenure. Its same with all type of cars from Alto to Audi. No change in interest rate based on car models, profile or occupation.
  4. No part prepayment charges for the loan season and foreclosure charges in loan termination after 6 months.
  5. That the interest measured on Daily reducing balance in the Part payment. Mid-month part payment helps you to reduce the tenure or the interest rates.
  6. Future rates will be connected with the MCLR rate based on the Floating Interest rate. That the final EMI will be reduced one if the interest rate goes down in future.
  7. Loan applicant should earn 3 lakhs per year, or else his or her immediate blood relation can be taken as the co-applicant. Their clubbed income will be taken as 3 lakhs.
  8. Applicant should be Self Employed. As per the current ITR, the applicant’s Net Profit or gross taxable income should be 4 lakhs.
  9. SBI bank offers loan for maximum 5 years old cars or else maximum 8 years from car manufacturing.
  10. Maximum loan amount will be provided to 85% finance of on Road price, that includes Ex-showroom price +RTO Road tax+Insurance.
  11. Documents that are needed, image SBI BANK.JPG

TVS credit services limited

  • Eligibility – Salaried or Self employed / Stability in Proprietorship or Partnership / Private or Public limited companies.
  • Documents that are needed – Age or Address or ID or Signature proof. Documents about your income such as
  • Salary slip/ FROM N16 / itr with a computation of income. Then the bank statement Photocopy along with the RC Book and Insurance certificate of the vehicle. If you have a partnership with a company means you have to submit Partnership deed along with the partnership firm. You have to submit the board resolution for private/public limited firm along with MOA/AOA.
  • Features – You can buy any car made in India within its pre-defined age limit. Problem free papers or documentation. Quick approval and expensive process. 48 months of time for repayment of the loan.
  • Loan eligibility is up to 15 times of gross monthly income. Also, no income document scheme to
  • cover up all the segments of the customers.

Reliance Commercial Finance

  • Eligibility – Salaried individual / Proprietors / Self-employed / Private limited companies / Limited companies /
  • Trusts / HUFs [Hindu Undivided Family account]. That the loan applicant should be a dweller in India. One lakh is the minimum loan amount. 12 – 60 months tenure for used cars. 21 years is the minimum age for applying for the loan. Maximum 65 years for self-employed individuals. 60 years for the salaried customer at the end of the loan tenure.
  • Documentation – reliance commercial finance .jpg

Further queries

  1. Eligibility for the co-applicant – Salaried / Self-employed / Singular Proprietorship / Partnership Firms:Anyone partner / HUFs- Karta / Trusts: anyone Trustee / Private or Public limited: anyone Director.
  2. Usually, no need for the guarantee, if the income is lowest to the Credit criteria then you need a guarantor for the surety.
  3. Loan tenure – 60 months.

Mahindra FINANCE

  • Easy and quick loan process.
  • Provide loan for up to 10 years old cars.
  • The lowest interest rate for used cars.
  • Eligibility – Any individuals looking for a loan to buy the used car, also have an interest in a reloan for a four-wheeler.
  • Documentation –
  1. KYC documents.
  2. Income proof.


  • Interest rate – 13.50% – 15%
  • Processing fees range – upto Rs.5,310.
  • Loan amount – Minimum Rs. 75K.
  • Tenure range – 1-7 years.
  • Eligibility – Minimum 21 years – Maximum 60 years for the salaried person.
  • Minimum 25 years – Maximum 65 years for self-employed.
  • Applicant should have minimum 2 years of experience, at least 1 year for the current employer.
  • Should have at least 3 years of experience in the current business establishment.
  • Documentation –
  1. KYC-PAN, address and ID proof.Income proof,
  2. Bank statement, along with one photograph of the applicant.

Other features

  1. No pre-closure fees after 18 months.
  2. No requirement for the guarantor.
  3. Available for part payment.
  4. Affordability.


  • Interest rate – 9.10% – 15%
  • Processing fees range – upto Rs.6,153.
  • Loan amount – Minimum Rs. 1L.
  • Tenure range – 1-7 years.
  • Eligibility – Minimum 23 years – less than 70 years.
  • Salaried individuals / Self-employed professionals / Non- professionals.
  • Documentation –
  1. KYC-PAN, address and ID proof, Income proof,
  2. Bank statement, along with one photograph of the applicant.

Other features

  1. No requirement for the guarantor.
  2. Available for part payment.


  • Interest rate – 8.75% – 11.50%
  • Processing fees range – upto Rs.5,500.
  • Loan amount – Minimum Rs. 1L.
  • Tenure range – 1-7 years.
  • Eligibility – From 21 and less than 75 for a salaried applicant.
  • Minimum 18 and less than 75 for self-employed persons.
  • Applicant must have a net annual salary of Rs.2.40,000 per annum, for calculating Income
  • eligibility parameters.
  • Documentation –
  1.  KYC-PAN, address and ID proof.
  2. Income proof, Bank statement, along with one photograph of the applicant.

Further facilities

  1. No requirement for the guarantor.
  2. Available for part payment.


  • Interest rate – 8.85% floating
  • Processing fees range – Rs.500-7000 + applicable tax
  • Loan amount – Maximum 1 Cr
  • Tenure range – 7 years.
  • Eligibility – Take-home salary at least – Rs. 20,000.
  • Salaried  1-year experience in the current job.
  • Business entities should have experience for up and be running 2 years.
  • Documentation –
  1. KYC-PAN, address and ID proof.
  2. Income proof, Bank statement, along with one photograph of the applicant.
  3. Aadhar Card is mandatory.

Further queries

  1. Guarantee required.
  2. Applications only avail in branch


  • Interest rate – 12% – 14%
  • Processing fees range – up to Rs.2,500.
  • Loan amount – Minimum Rs.1L.
  • Tenure range – 1-3 years.
  • Eligibility – Minimum 18 years – 65 years.
  • No guarantor requirement.
  • No part payment options.
  • Documentation –
  1.  KYC-PAN, address and ID proof.
  2. Income proof, Bank statement, along with one photograph of the applicant.
  3. Copy of RC and Insurance policy.


  • Eligibility – Applicant should be working for the same employer for 2 years.
  • Minimum 21 years while beginning at the car loan tenure and below 60 years – retirement age at the
  • end of the tenure.
  • Annual salary minimum Rs.1,50,000.
  • Should have residential stability for minimum 1 year.
  • Documentation – KYC and bank documents.

Select the bank according to your amenity based on the services provided in that bank.

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