Used Car Loan Interest Rates 2026
Compare pre-owned car loan rates of banks and NBFCs, see how much each lender funds against its own valuation, check vehicle-age limits, and follow the RC transfer, hypothecation, insurance and pending-finance checks before you pay for a second-hand car.
RBI repo rate 5.25% · Lender rates checked 27 September 2026Used Car Loan interest rates — 8 lenders compared
Published starting and maximum rates for each lender. The RBI repo rate is 5.25% after cuts totalling 1.25 percentage points in 2025, so floating-rate loans linked to the repo rate are cheaper than a year ago. The rate you are offered depends on your credit score, income, employer and loan details.
| Lender | Interest rate (p.a.) | Processing fee | Tenure | EMI per ₹1 lakh* | Rates as of |
|---|---|---|---|---|---|
| PNB Used Car LoanPublic sector bank | 9.45% – 10.55% | 0.25% of loan (min ₹1,000, max ₹1,500) + GST | Up to 5 years (60 EMIs) | ₹2,510 | 27 Sep 2026 (aggregator) |
| Indian Bank Pre-owned Car LoanPublic sector bank | 9.55% – 11.65% | As per the bank’s service-charge schedule — ask the branch | Up to 6 years (72 months) | ₹2,515 | 10 Sep 2026 |
| ICICI Bank Pre-owned Car LoanPrivate sector bank | 9.75% onwards | 2% of loan, max ₹20,000 + GST | Up to 7 years | ₹2,524 | Sep 2026 |
| Bank of Baroda Pre-owned Car LoanPublic sector bank | 10.20% – 12.95% | 0.50% of loan + GST (min ₹2,500, max ₹10,000 + GST) | Up to 5 years (car age from invoice + tenure ≤ 96 months) | ₹2,546 | Sep 2026 |
| SBI Pre-owned Car LoanPublic sector bank | 10.45% – 15.60% | 1.50% of loan + GST (min ₹3,000, max ₹10,000 + GST) | Up to 5 years (car age + tenure ≤ 10 years) | ₹2,558 | 16 Sep 2026 |
| Tata Capital Used Car LoanNBFC | 10.49% onwards | Up to 2.95% of loan + GST | 12 – 72 months | ₹2,560 | Sep 2026 |
| HDFC Bank Used Car LoanPrivate sector bank | 11.25% onwards | As per sanction — see the KFS (not published on sources checked) | 12 – 60 months | ₹2,597 | 18 Aug 2026 (aggregator) |
| Sundaram Finance Used Car LoanNBFC | 12.50% onwards | About ₹2,500 (aggregator) | Up to 4 years (48 months) | ₹2,658 | Sep 2026 |
* At the lowest rate for 4 years. Starting rates go to borrowers with strong credit scores and income; your rate depends on your profile. Sources and dates on each lender page — confirm with the lender before applying.
EMI calculator
More: EMI calculator · Eligibility calculator · Affordability calculator · Prepayment calculator
How the interest rate changes your EMI
| Rate | EMI | Total interest | Extra vs lowest rate |
|---|---|---|---|
| 10.00% | ₹12,681 | ₹1,08,702 | ₹0 |
| 11.00% | ₹12,923 | ₹1,20,293 | ₹11,591 |
| 12.00% | ₹13,167 | ₹1,32,012 | ₹23,310 |
| 13.00% | ₹13,414 | ₹1,43,860 | ₹35,158 |
| 15.00% | ₹13,915 | ₹1,67,938 | ₹59,236 |
₹5,00,000 for 4 years.
Used car loan vs new car loan
| Lender | New car loan from | Used car loan from | Difference | Extra EMI on ₹5 lakh, 4 yrs |
|---|---|---|---|---|
| PNB Used Car Loan | 7.60% | 9.45% | +1.85 pts | ₹437 |
| Bank of Baroda Pre-owned Car Loan | 7.60% | 10.20% | +2.60 pts | ₹617 |
| SBI Pre-owned Car Loan | 8.40% | 10.45% | +2.05 pts | ₹489 |
| ICICI Bank Pre-owned Car Loan | 8.40% | 9.75% | +1.35 pts | ₹321 |
| HDFC Bank Used Car Loan | 8.15% | 11.25% | +3.10 pts | ₹742 |
| Point | New car loan | Used car loan |
|---|---|---|
| Funding | Up to 85% – 100% of on-road price | 70% – 85% of the lender’s valuation (100% at a few lenders for strong profiles) |
| Tenure | Up to 7 – 8 years | 4 – 7 years, further limited by car age |
| Valuation | Invoice price | Lender’s valuer; lower of valuation and sale price |
| Paperwork | Dealer registers the car with hypothecation | RC transfer (Forms 29/30), removal of old hypothecation (Form 35), new hypothecation (Form 34) |
| Rate type | Often floating at PSU banks | Often fixed at private banks and NBFCs — prepayment charges may apply |
Starting rates as published by each lender or aggregator in Aug – Sep 2026. Starting rates go to the strongest profiles.
Vehicle age & funding rules by lender
| Lender | Vehicle age rule | Funding | Max tenure |
|---|---|---|---|
| SBI Pre-owned Car Loan | Car age + loan tenure ≤ 10 years | Up to 85% of valuation | 5 years |
| PNB Used Car Loan | Car not older than 3 years | 75% (25% margin) | 5 years |
| Bank of Baroda Pre-owned Car Loan | Age from original invoice + tenure ≤ 96 months | Lowest of 75% market value, 75% agreement value, 100% IDV | 5 years |
| Indian Bank Pre-owned Car Loan | Not published — ask the branch | 70% – 80% | 6 years |
| ICICI Bank Pre-owned Car Loan | Not published — assessed at valuation | Up to 100% (bank) / 80% (aggregator) | 7 years |
| HDFC Bank Used Car Loan | Not published — assessed at valuation | Based on valuation | 5 years |
| Tata Capital Used Car Loan | Car ≤ 10 years old at loan maturity | Up to 100% | 6 years |
| Sundaram Finance Used Car Loan | Models up to 7 years old | Up to 85% of lower of price and valuation | 4 years |
Example: a 6-year-old car can get at most 4 years at SBI or Tata Capital (10 − 6) and 2 years at Bank of Baroda (96 − 72 months), and is not eligible at PNB. Older cars mean shorter tenures and higher EMIs.
Pre-purchase checklist
- Pending financeCheck Vahan “Know your vehicle details” or mParivahan for hypothecation and the financier’s name; get the seller’s NOC and Form 35 if a loan existed.
- ChallansSearch the registration number on the e-challan portal; ask the seller to clear dues before transfer.
- RC detailsMatch chassis and engine numbers on the car with the RC; check owner serial, fitness/registration validity and PUC.
- Service historyAsk the brand’s authorised service network for records against the registration or VIN; compare odometer readings.
- Accident / flood historyAsk for past insurance policies and claim history, and get an independent inspection for repaint, weld and water-damage signs.
- Lender valuationGet the lender’s valuation before paying a token — it decides your loan, not the asking price.
Cost of owning a used car — worked example
| Item | Amount |
|---|---|
| Car price (agreed) | ₹6,00,000 |
| Down payment (25%) | ₹1,50,000 |
| Loan | ₹4,50,000 at 12.00% for 4 years |
| EMI | ₹11,850 |
| Total interest | ₹1,18,811 |
| Processing fee (1% + GST) | ₹5,310 |
| Insurance (≈₹15,000 a year × 4, falls as IDV drops) | ₹60,000 |
| Total paid over 4 years (excl. running costs) | ₹7,84,121 |
Also budget for: RC transfer and hypothecation fees (set by each state — shown on Parivahan when you apply), any pending challans, an independent inspection, immediate servicing, tyres, battery and brake pads on older cars, fuel, parking and FASTag.
Illustrative figures; insurance premium depends on model, city, IDV and add-ons.
EMI on a used car loan
| Loan amount | EMI @ 10.00% | EMI @ 12.00% | EMI @ 15.00% |
|---|---|---|---|
| ₹3,00,000 | ₹7,609 interest ₹65,221 | ₹7,900 interest ₹79,207 | ₹8,349 interest ₹1,00,763 |
| ₹5,00,000 | ₹12,681 interest ₹1,08,702 | ₹13,167 interest ₹1,32,012 | ₹13,915 interest ₹1,67,938 |
| ₹8,00,000 | ₹20,290 interest ₹1,73,923 | ₹21,067 interest ₹2,11,219 | ₹22,265 interest ₹2,68,701 |
Tenure 4 years, reducing-balance EMI.
Used Car Loan eligibility
- Indian resident — salaried, self-employed, professional or farmer (minimum and maximum ages vary by lender)
- Minimum income: about ₹2.5 lakh – ₹3 lakh a year, or ₹20,000 – ₹25,000 a month, depending on lender
- A good credit score — pricing at SBI and Bank of Baroda is linked to it
- The car must pass the lender’s valuation and vehicle-age limit (age + tenure caps such as 8 or 10 years)
- Private (non-commercial) registration with clear title and no unresolved hypothecation
Documents required
- KYC: PAN and Aadhaar / passport / voter ID / driving licence
- Income proof: last 3 salary slips and Form 16, or 2 years’ ITR with financials for self-employed
- Bank statements (usually last 6 months)
- Copy of the car’s RC, valid insurance and PUC
- Sale agreement or dealer invoice / proforma
- Seller’s KYC and signed Form 29 and Form 30 for RC transfer
- If the car had a loan: previous financier’s NOC and Form 35
- Valuation / inspection report (arranged by the lender)
How to apply
- Check eligibilityKnow your credit score and how much EMI your income supports; get a pre-approval if your bank offers one.
- Shortlist and check the carVerify RC, pending finance, challans, service and accident history; get an inspection.
- ValuationThe lender’s empanelled valuer inspects the car; funding is a % of this valuation, not the asking price.
- Sanction and KFSCompare the Key Facts Statement (APR, fees, foreclosure terms) — it stays valid for at least 3 working days.
- PaperworkSign the loan agreement, Form 34 (hypothecation) and RC transfer forms; pay your down payment.
- Disbursal and RC updateThe lender usually pays the seller or dealer; the RC is transferred to you with the new lender’s hypothecation noted.
RBI rules that protect you
| Protection | What it means for you |
|---|---|
| Key Facts Statement (KFS) | Mandatory for all retail and MSME term loans since 1 Oct 2024; shows the all-inclusive Annual Percentage Rate (APR), EMI schedule and every fee |
| Charges not in KFS | Cannot be levied without your explicit consent |
| Validity | At least 3 working days for loans of 7 days or more — time to compare offers |
| Floating-rate reset (RBI, Aug 2023) | At a rate reset you can choose a higher EMI, a longer tenure (without negative amortisation), switch to fixed rate, or prepay; you get quarterly statements |
Prepayment & foreclosure
| Situation | Rule |
|---|---|
| Floating-rate loans to individuals (non-business) | No prepayment / foreclosure charge — any lender, part or full, from any source of funds |
| Loans sanctioned or renewed from 1 Jan 2026 | RBI (Pre-payment Charges on Loans) Directions, 2025 also bar charges on floating-rate business loans to individuals and MSEs at most banks and large NBFCs; no minimum lock-in |
| Fixed-rate loans | Lender may charge as per the sanction letter and Key Facts Statement |
| Disclosure | Any charge must be shown in the sanction letter, loan agreement and KFS; waived charges cannot be levied later |
Used Car Loan guides, calculators & lenders
Calculators
EMI, eligibility, affordability and prepayment
Eligibility & applying
Who qualifies, documents, credit score and rejections
Checking the car
Valuation, age limits, inspection and history checks
RC, hypothecation & insurance
Ownership transfer and the lender’s charge
Costs & repayment
Down payment, total cost, budgets and foreclosure
Frequently asked questions
What is the lowest used car loan interest rate in 2026?
Among lenders we track, PNB starts at 9.45% (floating, RLLR-linked, cars up to 3 years old), Indian Bank at 9.55%, ICICI Bank at 9.75%, Bank of Baroda at 10.20% and SBI at 10.45%. NBFCs such as Tata Capital (10.49%) and Sundaram Finance (12.50%) start higher. Your rate depends on credit score, income, the car’s age and the loan amount.
Why are used car loans costlier than new car loans?
A used car’s value is harder to verify and it depreciates with no dealer or manufacturer warranty behind it, so lenders see more risk. The same banks that start new car loans around 7.6% – 8.4% start used car loans around 9.45% – 11.25%.
How much of the car’s price will the lender fund?
Lenders fund a percentage of their own valuation, not the seller’s asking price — about 75% at PNB and Bank of Baroda, 70% – 80% at Indian Bank, up to 85% at SBI and Sundaram Finance, and up to 100% for strong profiles at ICICI Bank and Tata Capital. If the price is above the valuation, you pay the gap.
How old can the car be?
Limits vary: PNB funds cars up to 3 years old; Sundaram Finance up to 7-year-old models; Bank of Baroda requires car age plus tenure within 8 years; SBI and Tata Capital cap the car’s age at loan maturity at 10 years.
Can I prepay a used car loan without penalty?
On floating-rate loans to individuals, RBI does not allow any prepayment or foreclosure charge — PNB, Bank of Baroda and Indian Bank floating loans are charge-free. Many used car loans are fixed-rate, where charges apply as per the KFS, e.g. ICICI Bank 3% in year one and 2% in year two, Tata Capital 5% – 6%.
How do I check whether the car still has a loan on it?
Enter the registration number in Vahan’s “Know your vehicle details” on the Parivahan portal or in the mParivahan app — it shows whether the car is hypothecated and to whom. The RC also shows “Hypothecated to”. Never pay in full until the seller gives the financier’s NOC and Form 35.
Which RTO forms are needed to transfer a financed used car?
Form 29 (notice of transfer) and Form 30 (application for transfer), Form 35 with the old financier’s NOC to remove its hypothecation, Form 34 to record your lender’s hypothecation, and Form 28 (RTO NOC) if the car moves to another state. Most of this can be applied for online on Parivahan/Vahan.
Does the No Claim Bonus transfer with the car?
No. NCB belongs to the seller, not the car. When the policy is transferred to you (within 14 days of the sale), the insurer recovers the NCB discount, and the seller can carry the NCB to their next car.
Is a used car loan better than a personal loan for buying a car?
Usually yes. A secured used car loan is typically cheaper than an unsecured personal loan, but the car is hypothecated to the lender until you repay. A personal loan leaves the RC free of any charge and can fund cars older than lenders’ age limits.
Rates compiled from lenders’ published rate pages and reputable aggregators (dates on each lender page) for comparison only. FinancePortal is not a lender or financial adviser; confirm terms and read the Key Facts Statement before borrowing.