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Used Car Loan Interest Rates in India

The used car loan interest rate depends on multiple factors, including the cost of funds, customer profile, location, type of vehicle, loan tenure, and prevailing market discounts. Lenders also assess your credit score, monthly income, and repayment capacity to determine the applicable second hand car loan interest rate, ensuring it aligns with your financial stability and risk profile.
 

Type of Fee Application Charges
Processing Fees

The processing fee is a non-refundable fee levied by Tata Capital while processing your loan application. You are charged this one-time fee even if the loan does not get sanctioned.

At Tata Capital, you are charged Up to 2.95% of the loan amount.
LTV We offer loans for a wide range of second-hand cars, so you don't have to compromise on your dream vehicle. You can avail a loan up to 95% for purchase of used car and upto 200% on your exisiting car. What's more? You get to enjoy flexible EMI repayment options and quick disbursal of funds which makes Tata Capital the best choice for taking car loans for used cars.

At Tata Capital, we understand that the requirement of each customer is unique. This is why our experts ensure you get a transparent and suitable deal at low-interest rates. We offer the most competitive interest rates in the industry, starting at just 10.49%.

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    Features & Benefits of Used Car Loans

    Not only are used car auto rates and charges competitive, but they also offer a variety of additional benefits. These benefits make availing of a pre-owned car loan extremely attractive for several reasons.

  • Attractive Interest Rates

    Tata Capital offers competitive used car loan interest rates, making it easier to finance a vehicle without high repayment burdens.

  • Flexible Loan Tenures

    Loan terms range from 12 to 72 months, allowing borrowers to choose a repayment period that suits their financial situation.

  • Quick Loan Disbursement

    Faster approval and disbursal ensure that funds are available quickly, helping you secure the best deals on a used car.

  • Minimal Documentation

    The process requires basic documents like identity proof, income proof, salary slips, and residence proof for quick approval.

  • Multiple Ways to Apply

    Apply online, visit a branch, connect via phone, or use Tata Capital’s virtual assistant or WhatsApp for a seamless application process.

Eligibility Criteria for Used Car Loan in India

  • Age: 21-60 years for salaried; 25-65 for self-employed

  • Minimum income: ₹25,000/month for salaried; ₹3 lakh annual for self-employed

  • Employment stability: 1+ year for salaried; 3+ years business vintage for self-employed

  • CIBIL score: 700+ preferred

  • For Self-Employed (Partnership): Minimum ABB (Average Bank Balance) of ₹25,000, partnership deed, ITR for 2 years

  • For Self-Employed (Others): Minimum ABB (Average Bank Balance) of ₹25,000, ITR, and business registration

  • Vehicle age at maturity: Maximum 10 years

How Used Car Loan Interest Rates are Calculated

The interest rate on a used car loan depends on factors such as the cost of funds, customer profile, location, vehicle type, loan tenure, and prevailing market discounts. Besides these, your monthly income, credit score, and repayment capacity are also taken into account. Tata Capital offers you a flexible, transparent, and suitable deal at the best possible interest rates, starting from just 10.49%.

If you want to estimate the overall repayment amount, you can calculate it by considering the associated charges and the total interest rate on the used car loan. Further, you can also use the interest rate calculator on the page. You simply need to enter a few details into the tool, including the loan amount, tenure, and interest rate. The calculator will tell you the EMI, total interest payable, and total interest payable. Thus, you can better control your finances.

Factors Affecting Used Car Loan Interest Rates

While calculating interest rates, lenders consider multiple fixed and variable factors.

Some of the key factors that influence the used car loan interest rates are:

  • Debt-to-Income Ratio

    Total EMIs (including the new loan) should stay within 40-50% of your monthly income. Lower ratios signal repayment capacity and unlock better rates.

  • Repayment Tenure

    Longer tenures reduce your EMI but increase total interest paid over the loan period. Shorter tenures mean higher EMIs but significantly lower total interest cost. Choose based on your monthly cash flow and total cost preference.

  • Down Payment Amount

    A higher down payment reduces the loan amount and lender's risk, often unlocking better interest rates. Down payments of 20% or more can meaningfully reduce your effective rate.

  • Income

    Higher and more stable income signals lower risk to the lender, unlocking better rates. Both salaried and self-employed applicants with consistent income patterns benefit.

  • Credit score

    Your CIBIL score is one of the strongest factors. 750+ unlocks the best rates. Below 700, rates rise significantly and approval becomes difficult.

Avail of a used car loan from Tata Capital to enjoy affordable second-hand car loan interest, starting at just 10.75%.

Tips to Get Lowest Used Car Loan Interest Rate

  • Maintain a Good Credit Score: Lenders trust borrowers with high creditworthiness, so the chances of getting favourable used vehicle interest rates go up with a good credit score.

  • Make a Higher Down Payment: You’ll need to borrow less if you make a higher down payment. This signals financial stability and low risk to the lender, and can help you secure better old car loan interest rates.

  • Choose a Shorter Loan Tenure: Shorter loan tenures often come with lower used auto finance rates. Quick repayment means you pay less interest overall on a pre-owned car loan.

  • Compare Offers from Multiple Lenders: Don’t just settle for the first loan offer you get. Compare used car loan interest rates India 2025 from top lenders to find the best deal.

  • Pick a Trusted Lender with Transparent Terms: Pick reputable lenders who offer competitive and fair used vehicle rates without hidden charges. Look for platforms known for offering the lowest car loan interest rate India 2025 to save more.

Impact of Credit Score on Pre-Owned Car Loan Rates

Your credit score can play a major role in the pre-owned car loan. Although this numerical evaluation of your credit history does not determine the interest rate in isolation, it can still have a significant impact. Applicants with scores above 750 are typically considered safe; thus, the lender offers the best possible deals. While scores between 700 and 749 may attract a moderate risk for the lender. Scores below 700 significantly narrow lender options and may result in higher rates or even application rejection. Improving your credit score before applying — by clearing existing dues, reducing credit card balances, and ensuring no EMI defaults in the preceding 12 months — is the most effective way to lower the interest rate on your used car loan.

Processing Fee & Other Charges on Used Car Loan

Type of Fee Applicable Charges
Documentation Charges

This fee covers the cost of verifying your documents, completing necessary compliance checks, and conducting due diligence before your loan is disbursed.

At Tata Capital, you are charged Up to Rs. 1999.
Foreclosure charges
  • This is a charge applied if you choose to repay your entire loan before the end of the contracted loan term.

    a) Within 12 months of the date of first disbursement- 6% of principal outstanding at the time of Foreclosure

    b) After 12 months of the date of first disbursement- 5% of principal outstanding amount at the time of Foreclosure
Statement of Accounts Charges
  • This is a charge applied for providing a physical copy of the Statement of Account – a statement having a list of all transactions made in your loan account during a given period.

    At Tata Capital, you will be charged
    Customer portal – Nil
    Branch walk-in - Rs. 250
Loan Cancellation Charge

This is a charge applied if you request loan cancellation after the cooling-off period.

At Tata Capital, you will be charged, Rs. 6500
Valuation Charges

This is a charge applied to assess the current market value of an asset for loan processing.

At Tata Capital, you are charged Rs. 750/-(Per valuation)
Stamp Duty

This is a government-mandated fee required for legally registering your loan agreement.

At Actuals
NACH/PDC Charges

This is a charge applied when you use post-dated cheques (PDCs) or physical NACH forms instead of setting up an electronic mandate for EMI payments.

At Tata Capital, you will be charged Rs. 500
NOC for conversion of private to commercial registration

This is a charge applied for issuing a No Objection Certificate (NOC) required to convert and register your vehicle at RTO from private to commercial use.

At Tata Capital, you will be charged Rs. 1999
Charges for Repossession of Vehicle

This is a charge applied when an asset is repossessed due to non-repayment of the loan.

At Tata Capital, you will be charged Rs. 22000 (as applicable)
PDD charges

This charge is applied for managing the Registration Certificate (RC), including document storage, administrative handling, and record management.

At Tata Capital, you are charged Rs. 450
Charges for delay in RC hypothecation

This is a monthly charge applied when you fail to submit the Registration Certificate (RC) for hypothecation to the Registering Authority within 120 days from the date of loan disbursement.

At Tata Capital, you are charged, Rs.1000/-per month till the time of registration/noting with the authority, where RC hypothecation is pending beyond 120 days post disbursement.
Part- Prepayment Charges

This is a charge applied if you choose to repay part of your loan before the end of your loan tenure.

a) Within 12 months of date of first disbursement - 6% of part-prepayment amount

b) After 12 months of date of first disbursement - 5% of part-prepayment amount
Switch Fee without any Top Up

This is a charge applied if you request a change or reduction in the interest rate on your existing Loan.

At Tata Capital, you will be charged,
(Rate reduction * Principal Outstanding*75%)

OR

Minimum of Rs. 5000 - whichever is higher
Broken Period Interest (BPI)

This interest is charged for the period between the loan disbursal date and the first EMI due date.

At Actuals


Note: GST, other government taxes and levies as applicable, will be payable on all fees and charges.

    Penal & Late Payment Charges on Used Car Loan

    Type of Fee Applicable Charges
    Penal Charges, if any, in case of delayed payments

    This is a charge for late EMI payments, calculated based on the number of days your EMI remains unpaid.

    At Tata Capital, For default in payment of interest and/ or principal amounts 3% per month on defaulted amount (Annualized Penal Charge of 36%)
    Dishonour of any cheque/ payment instruments

    These are those charges that are levied in case of an EMI bounce per instance. In other words, these charges are levied when you miss a used car loan EMI payment due to inadequate funds in your bank account. At Tata Capital, you’ll be required to pay Rs. 600 per instrument per instance
    Mandate Rejection Service Charge Charges will be levied if new mandate form is not registered within 30 days from the date of rejection of previous mandate form by borrower’s bank for any reasons whatsoever. Tata Capital charges a nominal amount of Rs. 450.

Checklist Before Availing Pre-Owned Car Loan

Before applying for a second-hand car loan, it’s important to evaluate key aspects like the following, to ensure a smooth ownership experience:
 

  • Insurance Details: Verify the type of insurance the car holds. Buyers can choose between third-party insurance or a more inclusive comprehensive policy based on their needs and budget.

  • Registration Certificate Verification: Be sure to check the car’s Registration Certificate (RC). It should be valid and must clearly mention the owner’s name, engine number, and chassis number. Additional documents may also be required. 

  • Vehicle Service History: Go through the vehicle’s service records to understand how well it has been maintained, how often it’s been serviced or whether any major repairs were required. 

  • Overall Condition of the Car: Inspect the car thoroughly, from its interiors and exteriors to its mileage and overall performance. Take a test drive before making your final decision.
     

Loan Terms and Interest Rates: Understand the terms of your loan thoroughly. Compare used auto interest rates, and pre owned car loan interest rates across lenders. Choosing the best offer can help you secure the lowest used car loan interest rate India 2025 and reduce your overall cost.

Used Car Loan EMI Calculator

Loan amount

₹
₹75,000 ₹35,00,000

Loan duration

1 Years 6 Years

Loan duration

12 Months 72 Months

Rate of interest

%
10% p.a 19% p.a

Monthly EMI

  • Total Amount Payable

    0*

  • Total Interest Payable

    0*

Total Amount Payable

Total Interest Payable

Apply Now

Disclaimer:

The fees/charges stated above are subject to change at Tata Capital’s discretion from time to time.
Customers who have taken a loan before April 15th, 2019, need to refer to the loan agreement and schedule of charges for applicable interest rates.

For the definitions of the above charges, please refer to the Master Terms and Conditions sheet. We will provide soft copies of the documents mentioned in the table above, free of cost. For hard copies, please refer to the above table for the applicable fees and charges.

FAQs on Used Car Loan Interest Rate

What is a used car loan interest rate?

A used car loan interest rate is the interest you have to pay on the principal loan amount. It depends on multiple factors like the cost of funds, customer credentials, geography, asset, tenure, and discounts offered in the market. With Tata Capital, you get transparent and accurate pre-owned car interest rates, which are the lowest in the industry.

Can I pre‑approve or lock in my interest rate before choosing a car?

Yes, you can get pre-approved for a used car loan and lock in your interest rate before finalizing your car. This helps you know your loan eligibility in advance and simplifies the purchase process. To apply for pre-approval:

  • Check for pre-approved loan offers on Tata Capital’s website and click “Apply Now”

  • Enter details such as mobile number and name verified by PAN

  • Provide your loan requirements along with personal and banking details

  • Complete a one-time eMandate authorization for EMI payment

  • Apply for insurance to safeguard your loan liabilities

  • Accept the E-Agreement, verify details, and receive instant loan disbursal

Is the used car loan processing fee refundable?

No, the used car loan processing fee is not refundable. Lenders use this money to take technical and legal action for the verification of your documents, your car’s age, make, etc. Therefore, even if they reject your loan application, you'll not receive a refund for the processing fee.

What are the foreclosure charges applicable to used car loan repayment?

If you want to foreclose or repay the entire loan amount in a single payment, you will have to pay the penalty known as the foreclosure charge.

Tata Capital charges foreclosure as follows:

  • Within 12 months of the date of first disbursement: 6% on the principal outstanding

  • After 12 months from the date of first disbursement: 5% on the principal outstanding amount

Is there a charge applicable to part-pre-payments?

Yes, part-pre-payment charges apply if you repay a portion of your loan before the tenure ends. If done within 12 months from the first disbursement, the charge is 6% of the prepaid amount, and after 12 months, it is 5%.

Can I prepay the loan without penalty?

No, you cannot prepay your used car loan without charges. Tata Capital applies part-pre-payment fees as follows:

  • 6% of the prepaid amount if done within 12 months of the first disbursement
  • 5% of the prepaid amount if done after 12 months from the first disbursement

Is interest on a used car loan tax-exempt?

Salaried individuals do not get any tax exemptions for a used car loan. However, Section 80C of the Income Tax Act states that self-employed individuals who want to purchase a car for commercial purposes can get some relief from high-interest used car loans. The interest you have to pay in a year is eligible for a tax deduction. Self-employed individuals can also file for tax benefits on the depreciation value of the car.

How long does it take to process the used car loan?

We take 24-36 hours to process your application, from the completion of documentation to sanctioning the loan.

How can I repay the used car loan?

You can repay a used car loan in easy monthly installments to avoid compromising your savings. The EMI amount is calculated using the formula:

[ P x R x ( 1 + R ) ^ N ] / [ ( 1 + R ) ^ N - 1 ]

Where:

  • P stands for the principal amount,

  • R stands for the rate of interest, and

  • N stands for the tenure of the loan in months. 

You can add the desired values in this formula to calculate used car interest rates manually. But this process can be time-consuming and complicated. For instant and accurate results, you can use a used car finance rate calculator.

Can I reduce or change the EMI on my used car loan?

No, your EMI remains the same for the life of the loan. However, we offer flexible solutions that are specifically designed to fit your unique second-hand car loan rate requirements.

Can I refinance my used car loan later?

Yes, you can refinance your used car loan later to get better terms or reduce your financial burden. Refinancing is especially helpful in the following situations:

  • When interest rates have dropped

  • When you want to reduce your monthly EMIs

  • When you need a longer repayment tenure

  • When you want to switch lenders for better benefits

Is it mandatory to provide a guarantor when I avail of a pre-owned car loan?

No, it is not mandatory to provide a guarantor when availing of a pre-owned car loan. However, if your credit profile is weak or your documents are insufficient, the lender may request one as added security.

Do I have to provide collateral or security when I use a used car loan?

No, you do not have to provide separate collateral or security for a used car loan, as the car you purchase is hypothecated to the lender until the loan is repaid.

What is the current used car loan interest rate in India?

Tata Capital's used car loan interest rate starts from 10.49%* per annum for eligible applicants, assessed on a reducing-balance basis. The actual rate applicable to your profile depends on your CIBIL score, income, vehicle age, and loan amount. For the most current rate, visit the Tata Capital used car loan section or speak with a representative.

What are the prepayment and foreclosure charges for used car loans?

Prepayment and foreclosure charges for Tata Capital's used car loan are specified in the loan agreement at the time of sanction. These charges vary depending on the outstanding principal, the number of EMIs completed, and the specific loan product. For the current applicable charges, refer to the Tata Capital used car loan rates and charges page or contact customer care directly.

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Abhi office jaane mein no jhig-jhig. Turn your aspirations into reality and enjoy a hassle-free ride now. Upgrade your daily ride journey with easy used- car loans. Apni khwahish puri karo with Tata Capital used car loans!

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