The demand for second-hand cars has increased significantly due to the proliferation of second-hand car dealerships across India and pocket-friendly prices. Now more than ever, having your car has become a necessity. People are buying cars to get closer to freedom from the public conveyance. With it, you can also follow the social distance norms during the COVID-19 pandemic. 

With the apparent financial crisis taking over the country, not every person can afford to buy a used car without touching their savings or investments. However, applying for a second-hand car loan is a better option to manage your finances when you do not have any other means. A second-hand car loan enables you to repay your loan within the stipulated EMIs with affordable interest rates and flexible repayment tenures. 

Before buying your second-hand car on loan, here are some crucial points to remember: 

1. Loan amount

The second-hand car loan amount depends on factors like the vehicle’s IDV, your income, repayment capacity, etc. Lenders offer up to 80% of the vehicle’s value as a loan. It is worth noting that not everyone has the same used-car loan amount requirement. How much you need depends on the value of your car and its features.

For example, a SWIFT VXI drive for 10000 km can cost you between Rs. 500,000/- to Rs. 550,000/-, whereas a TATA Indica that is driven for 40,000 km can come around Rs. 250,000. Find out your loan eligibility as it covers the cost of your vehicle. You can use the used car EMI calculator online to determine how much you can afford as a loan.

2. Eligibility criteria

There are numerous options available in the loan market to help you buy a used car. However, you must meet a used car loan eligibility criteria to access funds. If you do not meet the requirements set by the lender, you will not receive the funds required to buy your dream car. 

Although the eligibility criteria vary across lenders, the ones common across all platforms are:

  • You must be an Indian citizen currently living in one of the cities of India. 
  • You must be at least 21 years old at the time of application and 65 years of age at the end of the repayment tenure. 
  • You must be a salaried employee of a private or public company or you must be a self-employed professional. 
  • As a salaried person, you must show a minimum net salary based on your lender’s policy. 
  • As a self-employed person, you must show a minimum net profit based on your lender’s policy.

3. Second-hand car loan documents 

Lenders understand that keeping too many documentation requirements can discourage borrowers from applying for a second-hand car loan. So, the documents required for a loan are a bare minimum. 

Here are the required documents you must arrange before applying for a second-hand car loan

  • Identification proof: Aadhaar Card, PAN Card, Driving License, Passport (Any one of the documents). 
  • Address proof: Aadhaar Card, Voters ID Card, PAN Card, Utility bill, Driving License, Ration Card (Any one of the documents). 
  • Age proof: Passport, Driving License, or Aadhaar Card.
  • Income proof: Bank statement, Income Tax Returns, Salary slips, Form 16 (Any one of the documents).
  • Asset proof: Land or building house tax receipts. 
  • A passport-sized photograph. 

4. Equated Monthly Instalments (EMIs) 

Lenders allow you to determine your EMIs based on your affordability and preferences. It means that you have control over how much your EMIs should be. If you have a consistent income, you should opt for a fixed EMI to avoid any burden. But, if you are confident that your income will increase at a regular interval, structured EMI would be an ideal option for you. 

Furthermore, if you want to know how much you can afford to pay every month as EMIs, you can use an online used car EMI calculator. There are three main components of a used car EMI calculator – loan amount, interest rate, and repayment tenure. It allows you to make changes in these components until you figure out a suitable EMI. You can also choose to make repayments via online payment, post-dated cheques, or ECS. 


You can easily become the sole owner of a dream bike by getting a second-hand car loan. Although, you must ensure to meet the eligibility criteria and prepare the documents required to avail of an affordable interest rate and flexible repayment tenure.