• Used Car Loan Interest Rates

    Used Car Loan Interest Comparison Table

    Lender Interest Rate Repayment Tenure
    ICICI Bank 10.20% - 17.51% 5 years
    Tata Capital Starts from 15% 5 years
    Punjab National Bank Starts from 7.80% 5 years
    Axis Bank 14.80% - 16.80% 5 years
    Mahindra Finance Contact the bank 5 years
    State Bank of India 9.90% - 10.90% (CIC based rates will be applicable) 5 years
    HDFC Bank 13.75% - 16.00% (Rack Interest) 7 years
    Bajaj FinServ Contact the bank 5 years
    Kotak Mahindra Bank Contact the bank 5 years

    Used Car Loan – Features and Benefits

    • Flexible repayment terms are offered by certain lenders.
    • The documentation process is simple and minimum paperwork needs to be submitted.
    • Depreciation rates and insurance costs are lower for a used car when compared to a new car.
    • The loan amount will be less when compared to a new car loan. Therefore, the monthly payments will reduce.
    • Up to 90% of the car’s value may be provided as a loan.
    • It is easy to apply for the loan and most lenders allow you to complete the process online.
    • Most banks offer a long repayment tenure.

    Factors Affecting Used Car Loan Interest Rates in India

    Some of the main factors that affect the used car loan interest rates in India are mentioned below:

    • Debt-to-Income Ratio: Your debt-to-income ratio is an important factor that is considered when determining the used car loan interest rate. The ratio determines whether you can pay the EMIs on time. Your application will be rejected, or the interest rates will be high if your debt-to-income ratio is high.
    • Repayment Tenure: Lenders offer low interest rates in case you opt for a longer tenure. However, you will end up paying more interest. Even though the interest rates are high for a shorter tenure, the overall amount that you pay for the car will be low. Therefore, it is vital that you check the EMI before opting for the repayment tenure.
    • Increase the down payment: Lenders offer loans at low interest rates if you make a high down payment. Your EMIs will also reduce since the principal amount is low. Paying a high down payment also shows lenders that you financially sound and can repay the loan.
    • Relationship with Bank: You can contact your current bank before choosing any other lender. Lower interest rates may be provided if you have a good relationship with the bank. The interest rates can also be negotiated with your current bank.
    • Vehicle Age and Model: No security will need to be provided when availing a used car loan. If the monthly payments are not made, the car will be seized by the lender. Therefore, the age and model of the car is taken into account when the interest rates are determined. Lower interest rates are provided for newer cars. Interest rates may also be low if the car is from a reputed manufacturer.
    • Income: Lenders check your income when they determine the interest rates. Individuals with a steady income and a stable occupation may be provided a used car loan with a low interest rate. The company you work for is also considered when determining the interest rates.
    • Credit score: One of the most important factors that is considered when determining the interest rates is your credit score. The credit score also determines whether you will be eligible to avail a used car loan. Individuals with a good credit score are provided loans with a lower interest rate. Your loan application will be rejected, or the interest rates will be high if the credit score is low.

    Car Loan EMI Calculator

    If you wish to calculate the monthly payments, you can use the car loan EMI calculator offered by BankBazaar. Apart from being easy to use, the calculator helps in saving time as well. Details such as the rate of interest, loan amount, processing fee, and repayment tenure must be entered to calculate the EMI. The details will be displayed almost immediately.

    FAQs

    1. Is it mandatory to provide a guarantor when I avail a used car loan?
    2. No, it is not mandatory to provide a guarantor when you apply for a used car loan. However, if you do not meet the credit criteria, the lender may ask for a guarantor to be provided.

    3. Will there be any charges levied in case I prepay the car loan?
    4. Yes, lenders usually charge a certain amount if you prepay the used car loan. Depending on the bank, the charges will vary.

    5. Who can avail a used car loan?
    6. The below-mentioned individuals can avail a used car loan:

        • Hindu Undivided Families (HUFs) and Trusts
        • Private and Public Ltd. companies
        • Partnership firms
        • Self-employed individuals
        • Salaried employees
    7. Do I have to provide collateral or security when I avail a used car loan?
    8. No, you need not provide collateral or security when you avail a used car loan. The car acts as security.

    9. What are the different methods by which the loan can be repaid?
    10. The different methods by which the loan can be repaid are mentioned below:

        • ECS
        • Direct Debit
        • Post-Dated Cheques

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