29 May, 2025 | 11:01 IST
Buying a car is a significant milestone for many, but it doesn’t always have to mean driving home a brand-new vehicle. If you’re someone who finds the price of a new car a bit steep or just prefers the value a pre-owned model offers, opting for a used car is a smart alternative. And if you're short on funds, a used car loan can help make that purchase more accessible. In simple terms, a used car loan is a financing option that allows you to buy a second-hand vehicle through a hassle-free loan application process.
Although used car loans are purpose-specific and generally offer better terms for vehicle financing, a personal loan could be a viable alternative, especially if you're managing multiple financial obligations.
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Many banks and financial institutions in India provide financing options for buying pre-owned vehicles, each offering varying interest rates, loan tenures and eligibility requirements. Let’s take a look at few such entities:
In addition to the above, several other nationalised and private banks also offer competitive pre-owned car loan products tailored to various customer needs.
Personal loans of up to Rs 50 lakhs can be accessed through the Moneycontrol app or website, where you can compare offerings from eight major lenders. The entire process is digital, with some lenders approving and disbursing funds within minutes. With interest rates starting at 10.5% per annum, a personal loan can provide the flexibility to not only fund a used car but also manage other pressing expenses.
Most lenders follow similar eligibility standards for used car loan applicants. You must be:
A good repayment history and stable employment increase your credibility and can help in securing more favourable loan terms. The interest rate offered to you will largely depend on your income level, credit profile, and the value of the car.
Applying for a used car loan can be done either online or by visiting the nearest branch of the lending institution. Here’s how you can go about it:
Used car loans, like other vehicle loans, are repaid through Equated Monthly Instalments (EMIs). To understand how much you’ll be repaying each month, make use of online EMI calculators provided by banks or financial websites. These tools help you estimate your monthly outflow based on the loan amount, interest rate, processing fee and tenure.
While a used car loan is tied to the value of the vehicle and requires specific documentation, it’s worth considering a personal loan if you're looking for more flexibility in how you use the funds. You can borrow up to Rs 50 lakhs from eight top lenders through the Moneycontrol app or website. The process is fully online, and in some cases, the loan is approved and sent to your account within minutes. Interest rates start at 10.5% per annum. This can be helpful not just for buying the car, but also for other costs like insurance, repairs, or adding new accessories.
Overall, with a wide range of options available, getting a used car loan in India would not be difficult. But it’s important to choose a lender wisely, understand the loan terms and ensure the car you intend to buy is in good condition and has a clear ownership history.
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