Having a car is a dream for most, not just because of its practical benefits but also because it is a status symbol of sorts. In case you are unable to afford a brand new car, you can always purchase a pre-owned or second hand car at a much lower price. 

There are a number of loans available for this purpose as well.

Let us examine the features and benefits of a pre-owned car loan.

What is a Pre-owned Car Loan

A pre-owned car loan is a secured loan that is provided for the purchase of a second hand/used/pre-owned car. This loan is provided by most banks and is quite affordable as this is a secured loan. The repayment term can range from 1 year to 7 years and upto 90% of the car value is usually provided as loan although certain lenders such as HDFC Bank can even provide loans that are equal to the full value of the vehicle.

Features and Benefits of a Pre-Owned Car Loan

Given below are some of the salient benefits and features of a second hand car loan -

Eligibility for Pre-Owned Car Loan

The eligibility criteria for a used car loan will vary from one lender to another. However, the basic eligibility criteria is given below -

Documents for Pre-Owned Car Loan

Given below are some of the general documents required for a second-hand car loan -

Please note that the documentation requirements will vary from one lender to another.

Fees and Charges for Pre-Owned Car Loan

Given below are the fees and charges and used car loan interest rates -

Description Fees and Charges
Interest Rates Upto 15% per annum
Foreclosure Charges Upto 6% of principal outstanding
EMI Bounce Charges 2% of unpaid EMIs
Processing Fee Upto 3.5% of loan amount
Repayment Term Upto 7 years

Please note that the fees and charges will vary based on the lender.

Top Lenders Offering Pre-Owned Car Loan

Here are some of the top lenders in the country offering car loan for used cars -

Lender Interest Rate Tenure
HDFC Bank 7% onwards Upto 7 years
IDFC Bank 10.49% onwards Upto 7 years
ICICI Bank 9% onwards Upto 7 years
Axis Bank 7.40% onwards Upto 5 years
Bank of Baroda 12.75% onwards Upto 7 years

Things to Keep in Mind

If you plan to avail a used car loan then here are a few things to keep in mind -

Pre-Owned Car Loan - FAQs

Ans: Yes, most lenders do impose a foreclosure charge for second hand car loans.

Ans: A used car loan is a secured loan as the vehicle in question will serve as collateral.

Ans: Yes, most lenders require a downpayment to disburse pre-owned car loans.

Ans: The interest rate for a pre-owned car will vary based on the lender, your credit score, value of the car in question, etc. The interest rate for pre-owned car loans usually start at around 7% per annum.

Ans: Having a high CIBIL score is important to get a loan. Your CIBIL score determines your creditworthiness and higher the credit score, better is your chance of getting a loan. If your CIBIL score is below 700, your loan application could get rejected or the interest rate imposed will be very high.

However, you can still avail a personal loan from Money View as long as your CIBIL score is 600 and above which can be used for any purpose.

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