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  • Used Car Loan Eligibility Calculator

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  • For some, a car is just convenient transport, while for others, it’s a dream. Contemplating on a pre-owned vehicle can spring from many factors. Usually, learning drivers prefer a used car to get more confidence and then go in for a new car. For some, a pre-owned car is all they can afford. Sometimes it could also be a good buy if the seller is disposing off a good car for a cheap price. Whatever be the reason, buying a pre-owned car these days is much easier. Banks and financial institutions devised car loan schemes dedicated to customers interested in used cars. Customers can avail of loans for 40% to 100% of the car value.

    Used Car Loan Eligibility Criteria

    To avail of any loan from a bank there is a certain eligibility criteria that needs to be met before banks approve your application. Eligibility differs from bank to bank. Some of the usual criteria is listed below:

    • Residence - You should be a resident of India. However, some banks such as Federal Bank will consider NRIs as well.
    • Employment - A wide range of applicants are eligible including salaried employees, self-employed, professionals, proprietorships, partnerships, corporate companies, and Hindu undivided families.
    • Employment term - Banks also require you to be employed or be in the same line of business for a certain period of time, mostly 1 to 3 years.
    • Applicant’s age - Banks generally require applicants to be 21 years or above. Salaried employees should not exceed 60 years at the end of the loan tenure. For self-employed, it is extended to 65 years.
    • Income - A minimum net annual income or profit is required. The minimum income range is Rs. 1 lakh to 4 lakh.
    • Relationship with the bank - For salaried employees, some banks will lend car loans only if your salary is credited to their bank. For others, the average quarterly balance or prior loans can play a role in the car loan approval.
    • Permanent contact - Banks like HDFC Bank require you to have a landline either at your office or residence.

    Used Car Loan Eligibility According to Banks

    Pre-owned car loans are available from banks as well as financial institutions. Companies like Tata Capital, Magma and Kotak Mahindra offer used car loan schemes. A number of private and nationalised banks offer finance to purchase a used vehicle. The table below is a list of general eligibility criteria according to different banks.

    Bank Age of the car Applicant age Net Annual Income
    Salaried Self-employed Agriculturist

    HDFC Bank

    10 years

    21 - 60 years

    Rs. 1 lakh

    Rs. 60,000

    -

    IndusInd Bank

    8 years

    23 - 67 years

    Rs 1.5 lakhs.

    Rs 1.5 lakhs.

    Rs 1.5 lakhs.

    Canara Bank

    5 years

    -

    Rs 3 lakhs

    Rs 3 lakhs

    -

    State Bank of India

    5 years

    21-65 years

    Rs. 3 lakhs

    Rs. 4 lakhs

    Rs. 4 lakhs

    State Bank of Mysore

    5 years

    21-65 years

    Rs. 3 lakhs

    Rs. 4 lakhs

    Rs. 4 lakhs

    Vijaya Bank

    5 years

    21-70 years

    -

    -

    -

    State Bank of Hyderabad

    5 years

    21- 65 years

    Rs 2.5 lakhs

    Rs 2.5 lakhs

    Rs 2.5 lakhs

    State Bank of Patiala

    5 years

    21- 65 years

    Rs. 3 lakhs

    Rs. 4 lakhs

    Rs. 4 lakhs

    State Bank of Travancore

    5 years

    -

    -

    -

    -

    Andhra Bank

    3 years

    -

    Rs. 1 lakh

    Rs. 1 lakh

    Rs. 1 lakh

    Syndicate Bank

    -

    -

    Rs 2 lakh

    Rs 2 lakh

    Rs 2 lakh

    Factors affecting Used Car Loan Eligibility

    Applicant’s age - Applicants of a car loan should generally be above 21 years to be eligible. Banks also require applicants to not exceed 60 years or 65 years by the time they complete paying back the loan. If you don’t fall within this age range, you may not be eligible for a loan. The age bar is set within the eligible working or earning age.

    Age of the vehicle - Your eligibility for a car loan depends on the age of your selected pre-owned vehicle. Banks make it mandatory that the car not exceed a certain age. This is usually 5 years.

    Number of owners - Used cars can switch hands of owners multiple times. This will also affect the approval of a car loan. Some banks will approve only second-hand cars or up to three hands.

    Segment of car - The brand, make and model of your car also factors into the car loan. Car companies have many car models, which in turn have many variants. Some cars depreciate in value faster than others. In the event that you are unable to pay back the loans, banks resort to seizing the vehicle and selling it to recover the balance. If cars uphold their value for longer, this gives banks assurance that they can recover a sufficient sum.

    Income - You need to be earning at least Rs. 1 lakh per annum to qualify for a car loan. Different banks have different income requirements. Falling short of the eligible income will result in a loan rejection. Again, banks needs to know that you will be able to pay back the loan. Therefore, a minimum income is required as assurance that you can fund the EMIs throughout the course of the loan.

    Debt-to-income ratio - Prior debt will affect your used car loan eligibility. If you already hold current debt such as a home loan, personal loan, credit card balance, and the like, this means you are already paying EMIs or credit card bills. This devours your debt-to-income ratio. Banks will generally allow you to take debt that constitutes up to 60% of your income but not more than that. It’s not a good idea to take on more debt because there’s a higher risk of defaults and bankruptcy.

    CIBIL score - CIBIL scores are credit scores that depict a picture of what kind of credit consumer you are. If you have taken loans or credit cards in the past, your patterns in spending and repaying, the amount of debt you take on is recorded and maintained, and a score is generated. A good credit score will enhance your eligibility and your loan process will be faster. On the other hand, a lower score will result in banks being apprehensive about giving you a loan and may result in total rejection, or stricter terms and conditions on your loan.


    Customer relationship - Your relationship with the bank will also matter when it comes to applying for car loans. For salaried employees, many banks will favor customers who have a salary account with them. Some banks will lend only to these customers. For other applicants, being an existing customer of the bank will factor into your eligibility. If you hold a current or savings account this will work in your favor. Furthermore, if you have already availed of other loans such as a home loan from the bank, you might get a better offer on your car loan such as subsidized interest rates and processing fees.

    How Credit Scores affect Used Car Loan Eligibility

    Credit scores are recorded and maintained by the Credit Information Bureau of India Limited or CIBIL. When you take out a loan, overdraft, or a credit card, your behaviour with regards to spending, repayment, and other related patterns are tracked. If you default on your EMIs or cannot pay it back, your negligence on overspending all affect your CIBIL score negatively. But timely repayments, paying your credit card bills in full, holding well-organised debt will increase your score. So when you apply for a car loan, banks will enquire into your credit score to see what kind of customer you have been in the past. A low score will translate into rejection, or stricter terms on your loan, or higher interest rates. A high score will increase your eligibility and even put you in a better position to ask for better interest rates and terms on your loan.

    How to increase Used Car Loan Eligibility

    If you find that you are not eligible for a car loan, there are ways to increase your chances.

    • If you fall short on income, add your spouse or immediate family member’s as a co-applicant in the loan. You can then add their income as well and make up the minimum requirements.
    • If you cross the eligible age at the end of the tenure, banks might consider you if you can show steady flow of income where they have assurance that you can repay the loan.
    • Choose a used car that is in good working condition. Cars will have to undergo inspections by a bank agent, and a car that is running well will get you a car loan easily.
    • You can personally enquire into your CIBIL score to find out where you stand. A nominal fee is charged for this information but you can find out why your score is not up to the mark and take measures to fix it.
    • Lastly, try to clear off as much current debt as you can. This will free up your debt-to-income space and you will be eligible for a larger loan quantum.

    FAQs about Used Car Loan Eligibility

    1. How do I find out if I’m eligible for a used car loan?

      There are ways to find out your car loan eligibility. As each bank has different criteria, you can contact the bank directly and give them your information. They will tell you if you are eligible to apply. You can also enquire about your eligibility on some of the banks’ websites. Alternatively, you can use the BankBazaar.com Eligiblity Calculator, enter your information, and a list of eligible car loans will be generated for you.

    2. Is it possible to get a loan to buy a car that is more than 5 years old?

      Yes, you can avail of a car loan which is more than 5 years old. Many banks set the maximum age of the car as 5 years, but this is not necessarily the only factor that comes into play. IndusInd and HDFC Bank are examples of banks that provide loans for cars above the age of 5 years but not more than 10 years old. If the car is in good working condition, and is also a good model, banks will consider your application.

    3. What is the maximum loan amount I can get to purchase a used car?

      The maximum loan amount depends on the rules of the bank and your net annual income. Banks generally provide funding of 40% to 90% of the value of the car. HDFC offers a maximum of Rs. 50 lakhs. Other banks may give you a loan for up to 48 times your monthly income. The minimum loan amount is generally Rs. 1 lakh.

    4. Do I need to have a salary account with the bank to avail of a used car loan?

      Banks will definitely favor customers who have a salary account with them. Some banks will lend only to salaried individuals who have their salary credited to their bank. But it is possible to get a used car loan from other banks without a salary account, provided you fit the other eligibility criteria set by them.

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