A Loan Against Your Car? All You Need to Know

By Sheetal Kumari | March 3, 2025

MC Desk | July 4, 2025

A Loan Against Your Car? All You Need to Know

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Loans against cars let vehicle owners borrow money by pledging their car as collateral, without selling it.

What Is a Loan Against a Car?

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Banks and NBFCs such as Axis Bank, IDFC First Bank, HDFC Bank, ICICI Bank, AU Small Finance Bank, and Bajaj Finserv offer this facility.

Who Offers These Loans?

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Most lenders accept cars up to 10-12 years old for such loans, subject to inspection and documentation.

Vehicle Age Matters

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Some lenders offer up to 200% of car’s value. For eg., if your car is valued at Rs 10 lakh, you could borrow up to Rs 20 lakh.

Loan Amount Can Exceed Car Value

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Borrowers must check terms such as interest rate, EMI due date, processing fee, prepayment charges, and other conditions before signing up.

Read the Fine Print

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Until loan is fully repaid, the car cannot be sold or transferred. The vehicle acts as collateral throughout the loan tenure.

Restrictions on Selling the Car

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Rates generally range between 11-18%. Factors such as vehicle age and borrower’s credit score influence final rate.

Interest Rates Vary

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Moneycontrol advises users to check with certified experts before taking any investment decisions.

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Next: Equity and Debt Investing: Which is Better for Long-Term Wealth Generation?

Thanks For Reading !