Learn about used car loan interest rates and how they impact your total repayment. Understand the key factors that affect the interest rate and ways to get a lower rate to make financing
✓ Interest Rates Starting @ 10.50% ✓ Loan of up to ₹77 Lakhs ✓ Quick Disbursal
A used car loan provides an affordable way to finance a pre-owned vehicle, allowing buyers to spread the cost over manageable EMIs. Many lenders offer flexible repayment tenures and financing of up to 100% of the car’s value, depending on eligibility.
Interest rates play a crucial role in determining the total cost of the loan. Even a slight difference in rates can significantly impact your EMIs and overall repayment. Secure a used car loan through Bajaj Markets with interest rates starting from 10.50% p.a. Compare lender offers to find the most suitable financing option that aligns with your budget and repayment capacity.
Here is the used car loan rate of interest offered by lenders on Bajaj Markets:
Lending Partners |
Minimum Interest Rate |
Processing Fee |
Repayment Tenure |
Maximum loan amount |
Bajaj Finserv |
10.50% p.a. |
Up to 2.95% |
Up to 72 months |
Up to ₹77 Lakhs |
*Disclaimer: The aforementioned rates are subject to change at the lender’s discretion.
Used Car Loan - Features and Benefits
Loan Amount
Borrow up to 80–100% of the car’s value, depending on the lender and eligibility.
Flexible Tenure
Choose a repayment period ranging from 12 months to 6 years based on your financial comfort.
Competitive Interest Rates
Rates start from 10.50% p.a., varying by lender, loan amount, and credit score.
Minimal or Zero Down Payment
Some lenders provide full financing, reducing upfront costs for buyers.
Quick Approval & Disbursal
Most lenders process used car loans within 24–72 hours, ensuring fast access to funds.
Collateral-free Financing
The car itself serves as security, eliminating the need for additional collateral.
Prepayment & Foreclosure Options
Pay off your loan early, subject to lender-specific terms and possible charges.
Lower Depreciation Impact
Used cars depreciate at a slower rate than new ones, maintaining better value over time.
Easier Loan Approval
Lenders offer flexible eligibility criteria, making it easier to qualify compared to a new car loan.
Budget-friendly EMI Options
Structured repayment plans help borrowers manage EMIs efficiently.
Interest rates on used car loans vary based on several factors that determine the lender’s risk and the borrower’s repayment capability. Here are the key factors influencing interest rates:
Credit Score
Lenders assess the borrower’s credit score to determine interest rates. A higher score (750 and above) indicates lower risk, leading to better loan terms and lower interest rates. A lower score may result in higher used car finance rates or reduced loan eligibility.
Debt-to-Income Ratio
A high debt-to-income ratio suggests financial strain and increases the lender’s risk. Borrowers with a lower DTI (less than 50%) are more likely to get favourable second hand car finance interest rates.
Loan Term
Longer tenures reduce monthly EMIs but increase the total interest paid over time. Shorter tenures may have higher EMIs but lower interest rates, making them cost-effective.
Loan Amount
Lenders often set interest rates based on the loan amount. Higher loan amounts might attract slightly lower rates, while smaller loans may have higher rates.
Down Payment
A higher down payment can lower the loan amount, reducing the lender’s risk. Borrowers who contribute 20% or more of the car’s value upfront may qualify for better interest rates.
Age of the Car
Older cars depreciate faster, increasing risk for lenders. Interest rates tend to be higher for vehicles older than 5–7 years, while newer used cars may get more competitive rates.
Lender Type
Interest rates vary between banks, NBFCs, and car dealerships. Banks generally offer lower rates, while NBFCs provide more flexible eligibility criteria at slightly higher rates. Dealership financing may offer convenience but could include additional charges.
Economic Factors
Macroeconomic conditions like inflation, RBI repo rates, and overall market liquidity impact lending rates. During periods of low interest rates, borrowers may find more affordable financing options.
Income
Higher income stability and regular earnings improve loan eligibility and help secure lower interest rates. Lenders assess salary slips, income tax returns, and bank statements to determine financial stability.
Occupation
Salaried individuals with stable jobs in reputed organisations often receive better interest rates than self-employed applicants due to their steady income flow. However, self-employed individuals with high earnings and good creditworthiness can also secure competitive rates.
Loyalty
Existing customers of a bank or NBFC may be eligible for preferential interest rates, discounted processing fees, or pre-approved loans. Borrowers with a history of timely payments may also negotiate better loan terms.
Securing a lower interest rate on a used car loan can significantly reduce borrowing costs and make repayment more manageable. Here are some key strategies to get the best possible rate:
Improve Your Credit Score
A higher credit score (750 and above) signals responsible borrowing and reduces lender risk. To improve your score:
Pay all existing EMIs and credit card bills on time
Reduce outstanding debt to maintain a low credit utilisation ratio
Check your credit report for errors and get them corrected
Avoid multiple loan applications within a short period
Shop Around
Interest rates vary across banks, NBFCs, and car dealerships. Comparing offers from multiple lenders can help you find the lowest rate. Consider factors such as:
Interest rate type (fixed vs floating)
Processing fees and additional charges
Prepayment and foreclosure conditions
Special offers and discounts available
Choose a Shorter Loan Term
While longer tenures lower monthly EMIs, they increase total interest paid. Opting for a shorter loan tenure may:
Reduce the lender’s risk, leading to lower interest rates
Help clear off debt faster, improving financial stability
Save money on overall interest costs
Make a Larger Down Payment
A higher down payment results in lower loan amounts, which lower the lender’s risk and improve your chances of securing a better interest rate. Consider paying at least 20% or more upfront to:
Reduce monthly EMI burden
Avoid higher interest charges over time
Improve loan approval chances, especially for lower credit scores
Finding the best interest rate for a used car loan requires careful comparison of lender offers. Here are two essential tools that help in making an informed decision:
Online Used Car Loan EMI Calculators
To calculate your monthly payments, you can use the used car loan EMI calculator provided by Bajaj Markets. It's not only user-friendly but also saves you time.
To calculate the EMI, you'll need to enter details like the interest rate, loan amount, and repayment tenure. The results will be displayed almost instantly.
Compare different interest rates to understand the total repayment cost
Adjust down payment and tenure to find the most budget-friendly option
Pre-approval Offers
Helps borrowers check their eligibility for a loan before applying
Provides personalised interest rates based on credit score and income
Reduces the risk of loan rejection and speeds up the approval process
Utilising these options can help you ensure that you secure the most competitive interest rate for your used car loan while staying within your budget.
FAQs
Are interest rates higher on used cars?
Yes, interest rates on used car loans are typically higher compared to those for new cars. This helps safeguard lenders against the potential depreciation of the car’s value and the increased risk associated with older vehicles. The higher rates act as a buffer, compensating for the lack of warranty and the expensive nature of repairs for used cars.
What is the processing fee charged on a used car loan?
You can get a used car loan on Bajaj Markets by paying a processing fee of up to 2.95% of the loan amount. This is inclusive of GST.
Do I need a guarantor for a used car loan?
A guarantor is usually not required for a used car loan. However, lenders may ask for one if the borrower has a low credit score, unstable income, or limited credit history. A guarantor with a strong financial profile can improve loan approval chances.
Are there prepayment charges for used car loans?
Prepayment charges depend on the lender. Some financial institutions charge 2% to 5% of the outstanding loan amount for early repayment, while others may allow prepayments without penalties after a specific period. It is advisable to check the loan terms before applying.
Can I negotiate the interest rate for a second-hand car loan?
Yes, borrowers with a high credit score (750+), stable income, and strong repayment history can negotiate for lower old car loan interest rates. Comparing offers from multiple lenders and leveraging existing banking relationships may also help secure a better rate.
Are second-hand car loan interest rates higher than new car loan rates?
Yes, interest rates for second-hand car loans are generally higher than new car loan rates. This is because used cars depreciate faster, making them riskier for lenders. The age and condition of the car also influence the rate.
Can I get a loan for a car older than 10 years?
Most lenders finance used cars that are up to 8–10 years old at the end of the loan tenure. Loans for cars older than 10 years are rare but may be available from NBFCs or specialised lenders at higher preowned car loan interest rates.
Are old car loan rates fixed or variable?
Second hand car loan interest rates are usually fixed, meaning the EMI remains the same throughout the loan tenure. Some lenders may offer floating rates, but fixed rates are more common as they provide repayment stability.
