Used Car Loan – Apply for Pre-Owned/Second Hand Auto/Vehicle Loan Online
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Used Car Loan – Apply for Pre-Owned/Second Hand Auto/Vehicle Loan Online

Team CARS24
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Used Car Loan – Apply for Pre-Owned/Second Hand Auto/Vehicle Loan Online

Team CARS24
editor

It is said that the used car market is several times bigger than the new one. In fact, ever since the start of the pandemic, there has been a larger demand for used cars, which is basically due to their affordability. Most banks offer pre-owned car loans from as low as Rs 1 lakh and up to 85 percent of the vehicle’s value. Most banks even offer a hassle-free loan application process with quick approvals on submitting the right documents and verification of eligibility. Here’s everything you need to know about the used car loan.

Used Car Loan Benefits & Features

It must be mentioned here that used car loans are totally different from the loans on offer for new cars, and hence, both the options have totally different benefits and features than each other. It is also required to mention here that new car loan interest rates are lower than used car loan interest rates. In most cases, new car loan interest rates are around 9 percent, whereas the used car loan interest rates are in tune 15 percent. Used car loan interest rates are higher than new car loan interest rates as the lenders face a higher risk while lending money to purchase a used car. That said, there are several benefits and features even of a used car loan. In the table below, we have summed up the salient features of a used car loan to give you a better idea of this finance option.

Used Car Loan Benefits and Features
Loan Amount Avail of loans up to Rs.2.5 crore on a wide range of used cars and multi-utility vehicles  Get between 3 to 6 times your yearly income, and borrow up to 100% of the value of the car (Age of Car at loan maturity should not cross 10 years, subject to maximum loan tenure of 60 months)
Unmatched service    Benefit from end-to-end advisory — from research to title transferGet personalized help to choose a car that meets your specific needEnjoy preferential pricing if you are a HDFC Bank customer  Avail of customized repayment plans with pocket-friendly EMIs. You can figure out the monthly sum you’ll have to pay using the free Car Loan EMI Calculato               
Flexible Repayment Tenure Flexible repayment tenures from 12 months to 84 months
Quick and easy Processing and approval Experience transparent hassle-free processingGet quick approvals and speedy disbursals Track your application anytime, anywhere. Get status updates about your loan application at every stageEnjoy doorstep service and quick and easy documentation         
Loan without income document Get 80% of the value of the car as loan amount for 3 years without income proofGet 85% of the value of the car as loan amount for 5 years without income proof           

Used Car Loan Eligibility Criteria

Different lenders have different criteria for applicants of the second-hand car loans. However, given below are some of the general sets of rules that are prevalent at all lenders to gauge the eligibility of the applicant.

Type of Borrower                  Eligibility Criteria
Salaried Individuals  (Includes Doctors, CAs, employees of pvt ltd companies, public sector employees of both state and local bodies)Those at least 21 years of age and no older than 6 years of the age at the end of the tenure are eligible for a used car loanThose who have been employed for at least 2 years, with a minimum 1 year experience at the current employerThose who have a minimum household income of Rs. 2,50,000 per year
Self Employed Individuals (Sole Proprietorship)(Includes sole proprietors in the business of manufacturing, trading or services)Individuals who are at least 25 years old and below 65 at the end of the loan tenureThose who have been in business for a minimum of 3 yearsShould have an annual income of at least Rs 2,50,000
Self Employed Individuals (Sole Proprietorship)(Includes sole proprietors in the business of manufacturing, trading or services)Individuals who are at least 25 years old and below 65 at the end of the loan tenureThose who have been in business for a minimum of 3 yearsShould have an annual income of at least Rs 2,50,000
Self Employed Individuals (Partnership Firms)(Includes self-employed partners in business of manufacturing, trading or services)Individuals with annual income of at least Rs. 2,50,000Those who have a business with minimum turnover of Rs. 4,50,000 per annumIndividuals who have a residence or office post-paid telephone line for a minimum of three months
Self Employed Individuals (Private Limited Companies)Includes individuals who own a private company in business of manufacturing, trading or servicesIncludes individuals who own a private company in business of manufacturing, trading or servicesShould have an annual income of at least Rs. 2,50,000Individuals who have an office landline
Self Employed Individuals (Public Limited Companies)Includes directors in public ltd companies in manufacturing, trading or servicesIncludes directors in public ltd companies in manufacturing, trading or servicesShould have an annual income of at least Rs. 2,50,000Individuals who have an office landline
Self Employed Individuals (Hindu Undivided Family – HUF)Includes self-employed individuals in business falling under HUFIncludes self-employed individuals in business falling under HUFShould have an annual income of at least Rs. 2,50,000Individuals with residence and office post-paid telephone line for a minimum of three monthsThe Karta should be the co-applicant in his individual capacity

Documents Required for Used Car Loan

General Documents:

  • Application Form
  • Registration Certificate of Vehicle.
  • KYC Documents
Type of BorrowerDocuments Required
Salaried IndividualsOne of the following documents for ID & Address proof:- Valid Passport- Permanent Driving license [recent, legible, laminate]- Voters ID Card- Job card issued by NREGA- Letter issued by the National Population Register containing details of name & addressAll the below documents as income proof:- Latest Salary Slip- Latest Form 16/Latest ITR- HDFC Bank corporate salary account statement for salary credits above Rs. 80,000 for the previous 3 monthsAny of the following as sign verification proof:- Passport Copy- Photo Driving License with Date of Birth- Credit Card Statement with Credit Card Copy- Banker’s Verification- Copy of Margin Money Paid to the Bank
Self Employed Individuals (Sole Proprietorship)Any of the below documents as ID & Address Proof:- Valid Passport- Permanent Driving license [recent, legible, laminate]- Voters ID Card- Job card issued by NREGA– Letter issued by the National Population Register containing details of name & addressAny of the below as proof of sign verification:- Passport Copy- Photo Driving License with DOB (recent, legible, laminated)- Credit Card Statement with Credit Card Copy- Banker’s Verification- Copy of Margin Money Paid to the Bank
Self Employed Individuals (Partnership Firms)– Partnership deed as age proof- Partnership deed as identity proof- Latest ITR/Previous ITR with Adv. Tax paid Challan / latest IT assessment order as proof of income. Audited balance sheet in case the business turnover exceeds Rs. 40 Lakh, or the professional turnover exceeds Rs. 10 LakhAny of the following documents as proof of address:- Partnership Deed- Telephone Bill- Electricity BillAny of the following as sign verification proof:- Passport Copy- Photo Driving License with DOB (recent, legible, laminated)- Credit Card Statement with Credit Card Copy- Banker’s Verification- Copy of Margin Money Paid to the Bank
Self Employed Individuals (Private Limited Companies)– Memorandum and Articles of Association/Certificate of Incorporation as age proof- Memorandum and Articles of Association/Certificate of Incorporation as identity proof- Latest ITR and audited balance sheet along with profit & loss account as proof of incomeAny of the following documents as address proof:- Memorandum and Articles of Association- Certification of Incorporation- Telephone Bill- Electricity BillAny of the following as sign verification proof:- Passport Copy- Photo Driving License with DOB (recent, legible, laminated)- Credit Card Statement with Credit Card Copy- Banker’s Verification- Copy of Margin Money Paid to the Bank
Self Employed Individuals (Public Limited Companies)– Memorandum and Articles of Association/Certificate of Incorporation as age proof- Memorandum and Articles of Association/Certificate of Incorporation as identity proof- Latest ITR and audited balance sheet along with profit & loss account as proof of incomeAny of the following documents as address proof:- Memorandum and Articles of Association- Certification of Incorporation- Telephone Bill- Electricity BillAny of the following as sign verification proof:- Passport Copy- Photo Driving License with DOB (recent, legible, laminated)- Credit Card Statement with Credit Card Copy- Banker’s Verification- Copy of Margin Money Paid to the Bank

Used Car Loan Interest Rates

Used Car Loan Interest Rates and Charges

Used car loan interest rates vary from tenure and from one lender to other. However, at most private baks, below are the details for used car loan with tenure of up to 36 months and more than 36 months.

For Loans with tenure up to 36 months

1 Yr MCLRSpread over MCLREffective ROIResetProcessing FeeDocumentation Charges
7.50%7.05%- 9.05%14.55%-16.55%No ResetRs. 6000 or 1% of loan amount, whichever is lowerRs. 500

For Loans with tenure more than 36 months

TenureEffective ROIProcessing FeeDocumentation Charges
More than 36 months14.55%-16.55%Rs. 6000 or 1% of loan amount, whichever is lowerRs 500

Used Car Loan Car Fees & Charges

A used car loan isn’t a simple product. There are many factors involved, including some additional charges that you need to be aware of before you finally sign on the dotted line of the loan application form. Knowing about these charges will help you plan the management of loan better, thereby helping you pay it off easily. Basically, some of the most important factors you need to be aware of include foreclosure charges, part-payment charges, stamp duty revenue, overdue EMI interest and more.

Description of ChargesAmount to be Paid
Foreclosure charges*No foreclosure allowed within 6 months
6% of Principal Outstanding for pre-closures within 1 year from 7th EMI
5% of Principal Outstanding for pre-closures within 13-24 months from 1st EMI
3% of Principal Outstanding for pre-closures post 24 months from 1st EMI
Part-payment charges*Part-payment allowed subject to completion of 12 months
Part-payment allowed only twice during loan tenure
Part-payment allowed only once per year
Part-payment not to increase beyond 25% of Principal Outstanding
5% of the part-payment amount if part-prepayment within 13-24 months
3% on the part-payment amount if part-prepayment is after 24 months from 1st EMI
Stamp Duty (non-refundable)At actuals
Overdue EMI Interest2% a month
Processing fees* (non-refundable)1% of Loan Amount subject to a minimum of Rs.5000 and a maximum of Rs.10000

Processing Fee on loans for:
Manufacturer-backed Accessory Funding, Maintenance Package Funding, Manufacturer-backed CNG Kits Funding, Asset Protection measure Funding – Rs.3000.
Documentation Charges*Rs.700/- Charges not refundable in case of cancellation.
Collateral Charges*Rs.600/- to be refunded in case of case cancellation.
RTO Transfer ChargesAt Actuals
Cheque/ECS swapping chargesRs. 500/- per instance
Loan cancellationInterest charges from the date of disbursement till the date of cancellation of loan to be borne by the applicant. Processing Fee ,Stamp Duty, Documentation, Valuation and RTO charges are non-refundable charges
Legal, repossession & incidental chargesAt actuals
Duplicate No Due Certificate/NOCRs. 500/- per instance
Loan reschedulement charges/rebooking chargesRs. 1,000/- to be charged. If changes are required on RC, refundable Security Deposit – non-interest-bearing – of Rs. 5,000/- would be required.
LPG/CNG NOC/Other Special NOCRs. 500/- per instance
CIBIL Charges (only on request)Rs. 50/-
Cheque/SI/ECS Return Charges*Rs. 550/- per instance
Amortisation Schedule ChargesCustomer can download the schedule from E-Delight free of cost 
Rs. 200/- per schedule would be charged at the customer service desk
Commercial/Personal Use NOC (conversion subject to credit approval)Rs. 2,250/- per NOC
Rack interest rate13.75% to 16% based on segment and age of the vehicle to be sold
Car Valuation /Asset Verification Charges*Rs. 500 per case

Used Car Loan Interest Rates Comparison

As we’ve been saying, there are many lenders of used car loans. While the general terms and conditions remain constant at all the money lenders, there are some factors that vary from one bank to other. While some offer up to 80-85 per cent of the on-road price of the used car, others finance up to 100 per cent of the market value of the vehicle. Similarly, there are banks that offer a maximum loan tenure of 7 years while others offer a tenure of only 3 or 5 years.

BankCar Loan Interest RatesLowest EMI Per Lakh For Max TenureMaximum Loan Amount
HDFC Bank Car Loan Rates8.10 per cent Fixed7 yrs100% of market value
SBI Car Loan Rates9.75 per cent Floating5 yrs85% of on-road price
ICICI Bank Car Loan Rates14.25 per cent Fixed5 yrs80% of market value
Kotak Bank Car Loan Rates17.00 per cent Fixed5 yrs90% of market value
PNB Car Loan Rates11.20 per cent Floating5 yrs70% of market value
Union Bank of India11.60 per cent Floating5 yrs50% of market value
Central Bank of India9.95 per cent Floating5 yrs75% of market value
Andhra Bank11.85 per cent Fixed5 yrs60% of market value
Federal Bank11.15 per cent Fixed5 yrs75% of depreciated value
Bank of India8.90 per cent Floating3 yrs70% of market value
Bank of Maharashtra9.40 per cent Floating5 yrs50% of market value
Indian Bank12.25 per cent Floating5 yrs60% of market value
OBC10.90 per cent Floating3 yrs70% of market value
Bank of Baroda10.45 per cent Floating3 yrs80% 

FAQs

Q: Does a guarantor required for the used car loans?

A: In most case, one doesn’t require a guarantor but if the applicant’s income isn’t as per the bank requirement or if he does not meet the eligibility criteria, the bank may ask for the guarantor.

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

A: The maximum tenure for the used car loan is upto 7 years. This is the same as that for new car loans but used car loans generally have higher rate of interest.

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

A: No, as such there is no provision as collateral for second hand car loans

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

A: Generally, there is no need for the down payment for a used car loan.

Q: What documents are required to apply for used car loans?

A: Individuals applying for used car loan need to give ID proof, proof of residence, income proof, and a signature for applying for used car loans.

Q: Is interest on car loan tax-exempted?

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

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

A: Yes, individuals can negotiate the rate of interest in case they have a good credit score.