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

How can I get the lowest used car financing interest rate?

You can get the lowest used car financing interest rate by maintaining a strong credit score, as lenders reward borrowers with good repayment history. Having a stable income, a low debt-to-income ratio, and longer work or business stability also helps. Additionally, choosing a shorter tenure, providing a higher down payment, and comparing offers from multiple lenders can further improve your chances of securing a lower interest rate.

What is the processing fee for a pre-owned car loan?

The processing fee for a pre-owned car loan is a one-time charge applied during loan approval to cover documentation and administrative costs. At Tata Capital, the processing or documentation charges for a used car loan can be up to Rs. 1,999, payable at the time of loan disbursement.

What are the eligibility criteria for a used car loan?

Here are the eligibility criteria for availing a used car loan with Tata Capital: For salaried individuals, you must be between 21 and 60 years of age, earn a minimum monthly salary of Rs. 25,000, and have at least one year of work experience. For self-employed individuals, you must be between 21 and 65 years of age, with your business operating for at least two years, and have a minimum annual income of Rs. 3 lakhs. For self-employed individuals in partnerships or others, the firm or individual partner must have an annual income of at least Rs. 3 lakhs, provide the last three months’ bank statements, and maintain an average bank balance of 0.5 times the EMI.

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.

How is your old car loan interest rate calculated?

You can calculate the used car loan interest rate using a simple mathematical 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 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.

Used Car Loan Interest Rates, Fees and Charges 2025

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.

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.

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 EMI is due but valid instrument is not available for banking due to Mandate rejected by Borrower’s bank or EMI Post-dated cheques(wherever applicable) are not available. Tata Capital charges a nominal amount of Rs. 450

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 EMI is due but valid instrument is not available for banking due to Mandate rejected by Borrower’s bank or EMI Post-dated cheques(wherever applicable) are not available. Tata Capital charges a nominal amount of Rs. 450

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
Duplicate NOC Charges	This is a charge applied for issuing a physical copy of the duplicate No Objection Certificate (NOC) due to any reason. At Tata Capital, you will be charged Rs. 300
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

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Used Car Loan Interest Rates

Second Hand Car Loan Interest Rates

Avail TATA Capital loans directly from WhatsApp

Penal Charges on Used Car Loan

Other Charges On Second Hand Car Loan

Used Car Loan Interest Rate - Features & Benefits

Attractive Interest Rates

Flexible Loan Tenures

Quick Loan Disbursement

Minimal Documentation

Multiple Ways to Apply

Factors Affecting Second Hand Car Loan Interest Rates

Debt-to-Income Ratio

Repayment Tenure

Increase the down payment for lower used car interest rates

Income

Credit score

How to lower used car Interest Rates

Important things to consider before purchasing a used car

Used Car Loan EMI Calculator

Related Videos

Know more about Used Car Loans

Eligibility and Documents required for Used Car Loan

FAQs on Used Car Loan Interest Rate

What is a used car loan interest rate?

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

Is the used car loan processing fee refundable?

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

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

Can I prepay the loan without penalty?

How can I get the lowest used car financing interest rate?

What is the processing fee for a pre-owned car loan?

What are the eligibility criteria for a used car loan?

Is interest on a used car loan tax-exempt?

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

How can I repay the used car loan?

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

How is your old car loan interest rate calculated?

Can I refinance my used car loan later?

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

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

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