Often a car is perceived as an extension of your home! More so in major Indian cities where individuals end up spending so much time in their cars due to long commute involved. Therefore, owning a car is considered a necessity and is also a matter of pride in our country.  

Affordability and better quality of cars manufactured are some of the main reasons contributing to the increase and popularity of used cars. In India, the annual volume of used cars is estimated to be 4 million units, which is 50% higher than the new cars.  

New cars or used cars, finance is often a major requirement which aids owning your dream car. When it comes to valuation and financing of used cars, there are a few particularities that one should be aware of while going in for a used car loan. 

Valuation of a used car is the toughest part due to the factors like usage of the car (personal or commercial), kilometers driven, clear title, modifications done, if any, and if the car in question was involved in any sort of mishaps/accidents. 

Though the RTO records in the country are largely digitized making it easier to trace the title holder of the car, arriving at a fair value is difficult for most lenders due to the fact that lot of fudging and tinkering is possible in the unorganized used car market to make a car look better than what it is. 

It is due to this that the loans for used cars at priced higher than the new cars.  

Also, while going in for a used car, we would advise you to get the car from a reputed dealer who can assure you the quality of the vehicle. If you are buying from unorganized dealer, it may be good to get the car checked by an independent expert mechanic.  

Getting loans easily for used cars may prove to be a challenge. We therefore bring to you 5 lenders who offer great deals on Used Car Loans. 

HDFC Bank 

One of the market leaders in the space, HDFC Bank offers much more than just credit. 

Important Features 

  • They provide end-to-end advisory -- from research to title transfer 

  • One can also get personalized help to choose a car that meets your specific needs 

  • HDFC Bank customers enjoy preferential pricing 

  • Make use of their in-house site Car Bazaar to compare and get good cars 

Loan Amount Allowed 

You could avail loans up to Rs. 2.5 crore on a wide range of used cars and multi-utility vehicles  
 
Eligibility to avail between 3 to 6 times your yearly income, and borrow up to 100% of the value of the car as long as the age of Car at loan maturity should not cross 10 years, subject to maximum loan tenure of 60 months 

Loan without income documents 

  • Avail 80% of the value of the car as loan amount for 3 years without income proof 

  • Get 85% of the value of the car as loan amount for 5 years without income proof 

Tenure 

Flexible repayment tenures from 12 months to 84 months are available.  

Eligibility 

  • Salaried individuals including Doctors and CAs need to have had a job for at least 2 years, with minimum 1 year with the current employer. Minimum income criteria of Rs. 2,50,000 holds 

  • Self-employed individuals engaged in Sole -proprietorship businesses need to be in business for a minimum of 3 years and should earn at least Rs. 2.5 Lakhs per annum 

  • Self-employed individuals in partnership firms or private limited companies should have a minimum income of Rs 2.5 Lakhs in a year to qualify for loans 

Interest Rates and other charges 

  • 13.75% to 16% depending on the segment and age of vehicle 

  • Processing fee of 1.50% of Loan Amount subject to minimum of Rs. 2500 and maximum of Rs. 5000 

  • No foreclosure is allowed within 6 months from date of availing the loan 

Tata Capital 

Tata Capital offers used car loans for a wide collection of cars ranging from hatchbacks & SUVs to premium sedans. 

Loan amount allowed 

Loans up to 95% loan on your car value on flexible EMI repayment options. On select cars, even finance of 100% value of the used car is approved. 

Loan amount  

Anything from Rs. 1 Lakh to Rs. 50 Lakhs can be applied. 

Eligibility and Documentation 

For the salaried individuals, the minimum income criterion is Rs. 3 Lakhs per annum and it is Rs. 2 Lakhs for the self-employed. 

Interest Rates and Other Charges 

  • Interest rates start from 12.5% 

  • 1.25% of the loan amount or Rs. 5,000 per vehicle, whichever is higher is charged as Refinance Processing Fees 

  • 1.75% of the loan amount or Rs. 6,000 per vehicle, whichever is higher is charged as Purchase Processing Fee 

  • 5% of the principal outstanding is charged at the time of foreclosure along with applicable taxes, if any 

Repayment Options 

The finance process is made as simple as possible. Tata Capital allows flexible-EMI options such as Step-up, Step-down, Bullet, and Balloon payments across the entire range of cars (including premium ones), SUVs, MUVs, and crossover vehicles. 

Tenure  

Tenure 12-60 months is allowed.  

CAPITAL FIRST (Now known as IDFC FIRST BANK) 

You can avail Capital First’s used car loan across dealerships in 35 cities across India. Their second-hand car loan helps you get a vehicle without having to bear the entire cost. 

Eligibility 

  • You should be Salaried or a Self-Employed professional over the age of 21 years 

  • Your total work experience or business experience should be more than 1 year 

  • The car that you want to buy should not be older than 10 years 

Steps for Loan Application 

  • Apply for the Loan online 

  • Visit one of their dealers 

  • Submit your documents 

  • Drive the car of your choice 

Documents Required 

  • ID Proof 

  • Address Proof 

  • Last 6 months bank statement 

Need for Collateral 

Since the vehicle is hypothecated to Capital First, you do not have to offer any collateral to secure used car finance. 

Tenure 

Tenures between 11 to 84 months are allowed 

Axis Bank 

Important features 

  • Pan India tie-up with car dealers to facilitate your loans 

  • Offers you complete Transfer Support 

  • Low minimum loan amount starting from Rs. 1,00,000 

Eligibility 

For Salaried individuals, a minimum net annual salary of Rs 2.4 Lakhs apply, which is assessed based on the latest salary slip and Form 16 with minimum 1 year of continuous employment. 

For self-employed individuals, the eligibility criteria stands at a Net annual business income of Rs. 1.8 Lakhs per annum for selected models and Rs. 2.4 Lakhs per annum for certain models. They also require to be in the same line of business for 3 years at least. 

Documents required 
Along with the usual documents like ID proof, Application form, Photograph, Residence Proof, and Bank Statement, the following documents are required. 

  • Car Valuation report 

  • RC copy in case of refinance 

Post-sanction, Pre-disbursement Documentation 

  • Loan Agreement duly signed along with RTO set 

  • Standing Instructions (SI) Request / ECS Form/ Post Dated Cheques (PDC) – Security Cheques are required for SI and ECS 

Interest Rates and Processing Charges 

  • For loans with tenure less than 36 months, the interest rate is linked to MCLR with a spread of 6.10 to 8.10 bps without any reset condition 

  • For loans more than 36 months, the interest rate is pegged at 15-17% 

  • Processing fee of Rs. 6,000 or 1% of loan amount, whichever is lower, is charged 

  • Documentation charges of Rs 500 is applicable 

SBI Pre Owned Car Loan Scheme 

Loan amount allowed 

  • A minimum of Rs. 3 Lakhs and maximum of Rs. 10 Lakhs loan is allowed under this scheme 

  • A margin of 20% of the Invoice Value of Maruti's True Value, Hyundai's H-Promise, Honda's Auto Terrace, Tata's Assured, Mahindra's First Choice and other OEM's cars IDV is charged. In other words, 80% of the cost of the vehicle as per invoice is allowed 

Eligibility Criteria 

  • For the Salaried employees, a Net Annual Income criterion of Rs. 2.5 Lakhs or above is fixed. 

  • For self-employed, professionals and others, a Net Annual Income of Rs. 3 Lakhs is fixed 
    and for individuals engaged in agriculture and allied activities, an Annual Income of Rs. 4 Lakhs is mandatory. 

Interest Rates 

From 11.05% to 12.05% is chargeable depending upon credit score 

Age of the vehicle 

Not more than 8 years 

Tenure of the loan 

To calculate the maximum allowed tenure, the age of the vehicle is subtracted from 8 years. The tenure so arrived cannot exceed 5 years. 

Documentation 

When the application for the loan is made, the following documents are required 

  • Proforma Invoice 

  • Copy of Seller's RC Book 

  • Copy of Seller's Motor Insurance         

At the time of Disbursement, the documents required are: 

  • Sale Agreement between Dealer and Seller, may or may not be stamped; or Undertaking from Seller that he has sold the vehicle, received sale consideration and has no claim whatsoever. 

  • Undertaking from the Dealer to the financier instead of stamped Indemnity. 

  • Hypothecation clearance letter from Bank along with copies of HPTER (Form 35) wherever applicable. 

  • Correspondence with the Insurance Company regarding change in insured's name and financier.