Key Takeaway
A Used Car Loan is a smart and affordable way to own a second-hand vehicle without draining your savings.
This blog by Car Pe Cash walks you through all obstacles—from eligibility and benefits to documents and current interest rate trends—so you can make confident, wise decisions and get quick approval with minimal hassle.
When planning to buy a used car with limited funds, a Used Car Loan can help you get the car you want without draining your savings or waiting to save up.
Car Pe Cash offers a straightforward and completely digital loan process for suitable customers. But before you apply, there are certain important things to consider. Continue reading to learn more. Explore more about our loan services, including Used Cars Purchase Loan, Used Car Refinance Loans, Used Car Top-Up Loan, and Used Commercial Vehicle Loan, to find the best selection for your requirements.
Before applying for a used car loan online, it’s necessary to get an awareness of the process and the primary factors involved. This blog comprises everything from checking second-hand car loan interest rates to using a used car EMI calculator, assisting you in making brilliant choices and acquiring the appropriate financing for your aspirational car. Meeting the right used car loan eligibility conditions increases your chances of fast approval with Car Pe Cash.
What is a Used car loan?
A used car loan is borrowed funds to purchase a pre-owned vehicle, unlike a new car loan, which is for unused, brand-new cars. Used cars are typically 2 to 5 years old and have already lost some of their value. Taking a used car loan helps you get a dependable car that fits your budget. A pre-owned car loan makes it easy to buy a used car without paying the total value upfront. Explore various used car finance options that suit your budget and repayment capacity.
Why a Used Car Loan is a Smart Choice
Study the primary benefits of used car loans, for example, lower EMIs and adaptable repayment options. Car Pe Cash offers quick approval and flexible EMIs on every pre-owned car loan application.
Used cars are lower-cost than brand-new ones, so your monthly EMIs will be lower and simplify management.
Used car loans offer adaptable repayment choices, usually from 12 to 60 months. You may also be able to get up to 100% of the car’s value (*based on eligibility).
These loans are readily available, economical, and come with attractive interest rates and special deals.
You can apply online with limited paperwork and get quick approval.
Loans are ready to assist with various income types — whether you have a steady income, no income proof, or resource-based proof.
Some loans need little or no down payment, and you can pick an EMI plan that fits your budget.
How to Get a Used Car Loan in India in 2025
1. Understand How a Used Car Loan Works
Prior to the application, take the time to understand the used car loan process. It’s very similar to a new car loan but has a small difference. For instance, Used car loan interest rates may be a little bit higher, and the terms may differ. Make sure to compare loan offers across different financiers to find the best one for you.
2. Verify Your Credit Score
Your credit score plays a significant role in acquiring a used car loan and determining the interest rate. Formerly, you apply, verify your score — a score surpassing 750 is perfect. A decent credit score can help you get greater loan offers and reduced used car loan interest rates.
3. Check Eligibility
Understand the basic used car loan eligibility criteria, like age, income, and employment type, before applying. Each financier has various rules for who can get a used car loan. At Car Pe Cash, the rules are according to whether you're salaried or self-employed.
Self-employed: Must be an Indian resident aged 23–60, running a business for at least 4 years, and earning at least ₹1.75 lakh per year.
Salaried and NRIs: Must be aged 21–54, with at least 2 years of work experience, and earning at least ₹2 lakh per year.
Make sure you meet the criteria before applying.
4. Set Your Budget
Before purchasing a used car, determine how much you can afford. Check your monthly income and expenditure to understand a relaxed EMI amount. Remember to incorporate additional expenses such as insurance, fuel, maintenance, and any modifications you plan to make to the car.
Stick to your budget to avoid taking on excessive debt. Also, consider how long the car will last based on your city and whether it’s petrol, diesel, or electric. Electric vehicles typically continue and face fewer constraints.
5. Think of a Co-Signer
If your credit rating is down or you don’t have considerable financial status, you can request a close family member or best friend to co-sign your used car loan. If they have an excellent credit assessment, it can enhance your chances of acquiring the loan and may help you get a better used car loan interest rate, too.
6. Think of a Co-Signer
If your credit score is down or you don’t have substantial economic status, you can request a close family member or best friend to co-sign your used car loan. If they have an outstanding credit rating, it can strengthen your chances of obtaining the loan and may help you get a higher interest rate, too.
7. Choose the Appropriate Repayment Tenure
Before getting your car, consider how much you can smoothly pay every month. Use a Car Loan EMI calculator to check your monthly payments—enter the loan amount, interest rate, and repayment period.
If you're searching for a loan with good interest rates, Car Pe Cash offers new and used car loans. If approved, you can get up to 100% of the on-road price and pay it back over up to 7 years.
How Car Loan Interest Rates Work in India
Car loan interest rates are considered as Annual Percentage Rates (APR) and depend on related factors such as your earnings, credit score, outstanding debt, credit sum, car value, loan duration, and the RBI repo rate. The type of car doesn’t straight influence the rate, but its price might. For used car loans, the interest rate also relies on your age, the car’s model and variant, and if you’ve been a customer with us before. Our interest rates are among the minimum available. Car Pe Cash offers flexible used car finance options with low interest rates and easy documentation.
Who Can Apply for a Used Car Loan? Eligibility Explained
Prior to the application for a used car loan, make sure you meet the essential demands to prevent rejection. Here are the standard acceptability rules followed by top NBFCs like Muthoot Capital:
Age: You should be between 21 and 65 years old.
Income: Salaried people must earn at least ₹15,000 per month. Self-employed persons should have an annual income of at least ₹1.5 lakh.
Who Can Apply: Salaried employees, self-employed professionals, and agriculturists.
What Documents Are Required for a Used Car Loan?
Submitting the right documents for a used car loan helps speed up the approval process with Car Pe Cash. You need to provide these documents when applying for a used car loan:
ID Proof (any one): PAN Card, Passport, Aadhaar Card, Voter ID, or Driving License
Address Proof (any one): Aadhaar Card, Passport, Voter ID, Driving License, Utility Bill, Ration Card, or LIC Policy
Income Proof: Bank statement revealing salary, current pay slips, Form 16, or ITR
Asset Proof: Latest receipt of land, house, or property tax
Photo: Passport-size photograph of the applicant
What Are the Fees for a Used Car Loan? Know Before You Apply
When you take a used car loan, there are a few additional costs, excluding the interest. Here's a quick look:
Handling charges: A one-time, non-refundable fee is charged when your loan is processed.
Other Charges: These may include fees for paperwork, stamp duty, registration certificate collection, and amortisation.
Prepayment or Foreclosure Charges: If you choose to repay the loan early, you may need to pay a small fee since the lender loses interest income.
2025 Interest Rate Trends for Used Car Financing in India
One of the major benefits of a used car loan is that it helps you own a car without putting pressure on your savings. Used car loan interest rates are presently greater than they were a few years ago, but there may be relief ahead. Some of the banks might cut their key interest rate twice in 2025. This rate impacts the lending rate, which many financiers use to decide car loan rates.
Still, these are just forecasts. Staying updated on financial news and interest rate modifications can help you understand the market better and make smarter credit decisions.
Conclusion
A Used Car Loan can be an appropriate way to finance the purchase of a pre-owned car. However, before the application for a loan, ensure you realise the Used Car Loan application process, check your credit score, eligibility, identify your budget and contemplate a co-signer. With these points conceptually, you can make a wise decision and get the best feasible credit terms for purchasing your car. Keep all documents for the used car loan ready, like ID proof, address proof, income proof, and photos. For instant answers to similar inquiries, explore our detailed FAQs on used car loans. Have questions or need help with your loan application? Feel free to Contact Us for personalised support.
FAQs
1. What is a Used Car Loan?
A Used Car Loan, also called a second-hand car loan, is a loan you can take to help pay for a pre-owned car.
2. Can I apply for a used car loan online?
Yes, credit providers enable you to apply online. You can do it through their website or mobile app by filling out an uncomplicated application form.
3. What are the eligibility criteria for a used car loan?
To acquire a used car loan, you should be between 21 and 65 years old and have a stable income. If you’re self-employed, you should present proof of stable business.
4. What is the interest rate on used car loans?
Interest rates for used car loans differ according to the financier and your credit rating. It’s an amazing idea to compare costs from different lenders to find the most cost-effective option.