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Used Car Loan Interest Rates
Used car loan interest rates start from 7.35% and are charged as high as 20.00% or more, depending on your loan eligibility. Most lenders offer fixed interest rates, which stay consistent over your loan tenure and therefore allow for better planning of equated monthly instalments. Below, you can find the top 10 lowest interest car loans of the lenders that our financial analysts reviewed.
|Car Loan Lender||Interest Rate Range||Processing Fee|
|Kotak Mahindra Prime Limited||6.50% - 20.00%||Ask the lender.|
|Canara Bank||7.35% - 9.90%||0.25%, minimum Rs. 1000, maximum Rs. 5000|
|HDFC Bank||9.40% - 16.35%||1.00%, minimum of Rs. 5000, maximum Rs. 10000|
|State Bank of India||9.50% - 10.50%||0.20%, maximum of Rs. 5000|
|ICICI Bank||10.00% - 18.00%||2.00%, maximum Rs. 15000|
|Union Bank||10.40% - 10.50%||Rs. 1000|
|Indian Bank||From 11.00%||Ask the lender.|
|Federal Bank||From 13.80%||Rs. 1500 - 2500|
|IndusInd Bank||14.00% - 20.00%||5.00%|
|Axis Bank||14.55 - 16.55%||1.00%, maximum Rs. 6000|
Best Used Car Loan for Low Interest Rate
If you are seeking a low interest car loan, Canara Bank is the first lender you should consider for your car financing needs. With used car loan rates between 7.35% and 9.90%, the Canara Bank car loan has some of the lowest rates in India. Additionally, the lender offers a 0.05% interest rate concession to women.
The lender's extra charges are also comparably lower than other banks and car loan lenders. The Canara Bank processing fee is set at 0.25% of the total loan amount, with a maximum charge of Rs. 5000. Similarly, the bank charges a prepayment penalty of only 2.00% of the outstanding balance, which is good for borrowers who wish to pay down their car loan in advance.
It's important to note that Canara Bank funds up to Rs. 15 lakhs (or 60% of the car's valuation, whichever is lower), which means that the Canara Bank car loan is not tailored to luxury vehicles or borrowers who require more funding assistance. If you are in need of more car loan financing, we recommend you read our reviews of HDFC Bank or State Bank of India.
In terms of car loan eligibility, Canara Bank has relatively standard conditions. The bank allows a 5 year tenure on car loans, as well as a maximum used car age of 5 years. Salaried borrowers should have an annual income of Rs. 2.5 lakhs, while self employed borrowers should have a minimum annual income of Rs. 3 lakhs as per their latest income tax return.
Best Used Car Loan for Long Loan Tenure
ValueChampion found that State Bank of India (SBI) offers the best used vehicle loan, due to their comprehensive pre-owned car loan packages for agriculturalists, salaried and self employed borrowers. With one of the longest loan tenure maximums in the market, SBI's 8-year loan term allows borrowers to pay low EMIs over a longer period of time.
SBI car loan interest rates are charged between 9.50% and 10.50%, with an average lending rate of 9.52%. While SBI does not have the lowest interest rates in the market, it still fares well against our calculated average of 10.65%.
In addition to competitive rates of interest, the SBI second hand car loan has a very low processing fee of 0.20% with a maximum of Rs. 5000. Paired with lower than average fees like a 1.00% prepayment penalty and 3.00% foreclosure fee, the SBI car loan for used cars can save you many costs down the road.
SBI will finance up to 80% of your used car's valuation, with a minimum of Rs. 3 lakhs and maximum of Rs. 10 lakhs. This is considered a small car loan; if you are seeking a large car loan, we recommend you read our review of HDFC Bank.
SBI's car loan eligibility criteria is flexible compared to the other lenders we analysed. As mentioned, the bank's 8-year car loan tenure is one of its biggest strengths. Most other lenders allow EMI repayment only up to 5 years. However, it's important to note that your final loan term will depend on the age of your used vehicle (with a maximum age of 5 years).
Best Used Car Loan for 100% Financing
The HDFC Bank car loan is amongst the most popular car loans in India for good reason. The bank finances 100% of on-road costs, with a maximum of Rs 2.5 crore. In addition, HDFC Bank gives the option of 85% funding to borrowers who have no income documents.
HDFC used car loan interest rates start from 9.40% and can be charged as high as 16.35%. With an average lending rate of 13.33%, it's clear that HDFC is not the most cost-friendly option. However, HDFC's stand out feature is its ability to finance expensive or luxury vehicles, hence its high rates of interest as large loan amounts come with more risk in repayment.
SImilarly, the bank's fees and extra costs are comparably higher than other banks and car loan lenders. HDFC charges a 1.00% processing fee, with a minimum of Rs. 5,000 and maximum of Rs. 10,000. Further, its prepayment and foreclosure charges are charged between 3.00% to 6.00%, which is higher than the other lenders that our financial analysts reviewed.
Regarding car loan eligibility, HDFC Bank provides great features to borrowers. Competing with State Bank of India, HDFC Bank has a maximum loan tenure of 7 years (without any conditions). Further, HDFC car loans finance pre-owned vehicles up to 10 years of age by loan maturity.
HDFC Bank eligibility criteria for applicants is standard. Salaried borrowers should be between the ages of 21 and 60, while self employed borrowers should be no older than 65 by loan maturity. Additionally, the income requirement for both salaried and self employed borrowers is Rs. 2.5 lakhs per annum, including the income of your spouse or co-applicant. It's important to note that HDFC requires 2 to 3 years of employment stability, as well, depending on your job status.
How to Choose a Car Loan
There are many factors to consider when choosing a car loan, like interest rates, processing fees, and eligibility criteria. To help you with this process, we've created a car loan checklist that details all the important elements of the car loan process.
|Car Loan Checklist|
|Choose Your Car||The first step in getting a car loan is deciding the brand and model of the car that you wish to finance.|
|Your credit score is a key factor in determining your car loan interest rate, therefore you should dispute any errors on your credit report and improve your CIBIL score before applying, if possible.|
Compare Car Loans
|Look for the lowest car loan rates, processing fees, and other charges like prepayment and late payment penalties. To find the best car loan for you, you will need to look at factors like loan tenure, margins, and eligibility criteria.|
Apply for a Car Loan
|Use a car loan EMI calculator to estimate how much you will need to repay each month. Based on your car financing needs and ability to repay your loan, decide on your desired loan amount and apply accordingly.|
Submit Required Documents
|During your application process, your lender of choice will require documents for proof of address, identity and income in order to verify your ability to pay back your car loan.|
To choose the best bank for a used car loan, you will need to consider its interest rates, processing fee, and eligibility criteria, amongst other factors. You can find the best banks for a used car loan here.
Used car loan interest rates are a significant factor in determining your total cost of borrowing. You can find used car interest rates between 7.35% and 20.00% or more, depending on your eligibility.
Depending on your car financing needs, you can find a small car loan of Rs. 10 lakhs or large car loan up to Rs. 2.5 crore. Each bank or car loan lender provides different minimum and maximum used car loan amounts.
Used car loans are for borrowers who are seeking help in financing the purchase of a second hand car. Based on your car loan eligibility, you can avail significant funding from a bank or lender to cover the costs of the car you wish to purchase. You will have to repay your car loan in EMIs over a period of time, with additional costs like a car loan interest rate factored in.
A car loan EMI calculator allows you to estimate your car loan EMI. Most banks and lenders offer a car loan calculator on their website. By inputting your loan amount, car loan interest rate, and loan tenure, you can calculate how much loan will need to be repaid per month.
Our team of financial analysts reviewed over 75 car loans from more than 25 lenders. We analysed interest rates, processing fees, and other charges to calculate each loan's total cost of borrowing, as well as considered eligibility criteria and special features of each loan scheme. Below, you can find all of the lenders that we meticulously researched and compared.
|Lenders Reviewed in ValueChampion's Study|
|Axis Bank||Bajaj Auto Finance||Bajaj Finserv||Bank of Baroda|
|Bank of India||Bank of Maharashtra||Canara Bank||Central Bank of India|
|Cholamandalam Finance||Federal Bank||HDFC Bank||ICICI Bank|
|IDBI Bank||IDFC First Bank||Indian Bank||IndusInd Bank|
|Jammu & Kashmir Bank||Kotak Mahindra Prime Limited||Magma Fincorp||Mahindra Finance|
|Punjab National Bank||Saraswat Bank||Shriram Transport Finance Company Limited||State Bank of India|
|Sundaram Finance||Tata Capital||Tata Motors Finance||Union Bank of India|