27 February, 2025 | 11:00 IST
Buying a car is a big financial decision, and not everyone can afford to pay the full amount upfront. That’s when car loans come in as a convenient option. A car loan, or auto loan, helps you purchase a vehicle by covering most of the cost, which you repay in equated monthly instalments (EMIs). This allows you to own a car without straining your savings.
If you are running short of funds, going for a second-hand car can be a practical choice since it’s budget-friendly. If you need financial support, a used car loan makes it easier to afford a pre-owned vehicle while repaying in convenient EMIs. Many banks and financial institutions provide these loans, though the terms may differ slightly from those for new cars.
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A used car loan is a type of loan that helps you finance the purchase of a pre-owned vehicle. Instead of paying the full amount at once, you can borrow money from a bank or financial institution and repay it in fixed monthly instalments, along with the interest amount.
Since used cars have a lower market value than new ones, lenders typically finance 70-90% of the car’s price, requiring you to make a down payment for the rest.
Interest rates on used car loans are often slightly higher than new car loans because pre-owned vehicles have a lower resale value.
The loan tenure ranges from 1 to 5 years, with shorter tenures leading to higher EMIs but lower overall interest costs. Before approving the loan, lenders consider factors like the car’s age, condition, resale value and the borrower's credit score.
If you are looking for a loan to buy a used car, availing a personal loan could be an affordable option. For instance, you can secure loans up to Rs 50 lakhs from eight lenders in a completely paperless process. These loans are available at a low interest rate starting at 10.5% per annum. You can secure the loan in three easy steps— finalise the loan offer, complete e-KYC and set up the EMI payment.
A used car loan and a new car loan serve the same purpose – helping you finance a vehicle – but they differ in several ways.
Eligibility for Salaried Individuals
Eligibility for Self-Employed Individuals
However, the eligibility criteria may vary depending on the lender.
Lenders may ask for documents based on their requirements but here are the basic ones:
Financing your dream car through an auto loan depends on your financial condition. With the advent of digital lending platforms, you can avail a personal loan to buy even a used car. It’s important to asses various car loan or personal loan offers to get the best deal.
You can explore multiple personal loan offers on the platforms like Moneycontrol app and website. The loans start at an interest rate of as low at 10.5% per annum and the lenders offer up to Rs 50 lakhs. The application process is 100% paperless and you can receive the amount in your bank within a few minutes to a few hours.
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