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Loans

Loan Against Car: How Much You Can Borrow and the Process

Banks lend up to 140–200% of your car's value from about 13.75% a year, with hypothecation recorded on the RC through Form 34.

RM

Written by Rohan Mehta

Published 29 October 2026·7 min read

On this page9 sections
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A loan against car raises cash on a car you already own, either by pledging a loan-free car or as a top-up on your car loan. Banks advertise up to 140% to 200% of the car’s value, from about 13.75% a year, over up to 5 to 7 years. The lender’s hypothecation stays on your RC until you repay.

Key facts

Item What lenders publish (September 2026)
Loan amount ICICI Bank and Axis Bank: up to 140% of the car’s valuation; HDFC Bank: top-up up to 150% of car value; IDFC FIRST Bank: up to 200% of market value, capped at ₹50 lakh
Interest rate HDFC Bank from 13.75%; IDFC FIRST Bank from 13.99%; Axis Bank 13.30% to 15.55%
Tenure HDFC Bank 12 to 84 months; IDFC FIRST Bank 12 to 60 months; Axis Bank refinance and top-up up to 5 years
Processing fee HDFC Bank up to 1% (₹3,500 minimum, ₹9,000 maximum); Axis Bank 1% plus GST; IDFC FIRST Bank from 1% or ₹5,000, whichever is higher
Foreclosure HDFC Bank 6%, 5% or 3% of principal outstanding depending on timing; IDFC FIRST Bank 5% plus GST; Axis Bank 5% plus GST
RTO forms Form 34 to add hypothecation to the RC; Form 35 to remove it

Figures are the banks’ published rates and charges. Your offer depends on your credit score, income and the car.

Loan against car, refinance and top-up

Lenders use the three names loosely, so read which product you are being offered:

ItemDetails
Refinance on a fully paid car.The car has no loan and no hypothecation. ICICI Bank says its refinance is only for cars with nil outstanding that are not already pledged. The bank values the car and lends against it.
Top-up on an existing car loan.You already repay a car loan to the same bank, and it adds a new loan on the same car. HDFC Bank offers this to existing car-loan customers with a clean 9-month repayment record, without a fresh valuation.
Balance transfer with top-up.A new lender pays off your old car loan and gives you extra cash. Axis Bank lists this at up to 150% of the original loan amount.

This page covers borrowing against a car you already have. If you want a loan to buy a second-hand car, see our used car loans page.

Eligibility: car, ownership and income

Each lender sets its own rules. Published criteria from three banks:

Criterion HDFC Bank RBL Bank IDFC FIRST Bank
Age (salaried) 21 to 60 years 21 to 60 years 21 years; up to 60 at end of tenure
Age (self-employed) 31 years when applying; up to 65 at end of tenure 21 to 75 years 21 years; up to 70 at end of tenure
Minimum income ₹2.5 lakh a year ₹2.4 lakh a year Not stated on product page
Work history 2 years’ employment, 1 with current employer; or 3 years in business 2 years’ job experience; or 3 years in the same business Not stated on product page
Car age Not stated on product page Up to 12 years at end of tenure Not stated on product page

The car must be registered in your name, with a valid RC and insurance. Axis Bank’s FAQ says the car should not be more than 10 years old. Your credit score matters as much as the car; our page on the credit score needed for a car loan explains what lenders look for.

How lenders value the car and set the amount

For a refinance, the bank sends a valuer to inspect the car. HDFC Bank charges ₹750 for car valuation or asset verification. The valuer checks the model, year, kilometres run, condition and resale demand. The bank then applies its loan-to-value (LTV) percentage to that figure, and caps the result by your repayment capacity.

A loan above 100% of the car’s value means you owe more than the car would sell for. If you default, selling the car may not clear the loan and the bank can pursue you for the balance. Borrow what you need, not the maximum on offer.

Example: ₹3,00,000 at 13.75% for 3 years has an EMI of ₹10,217. You pay ₹67,808 in interest, before fees. Try other amounts in the EMI calculator.

Documents and hypothecation on the RC

  1. Give KYC: Aadhaar, PAN or passport, plus address proof.
  2. Give income proof. RBL Bank asks salaried applicants for 3 months’ pay slips, Form 16 and 3 months’ bank statements. Self-employed applicants give 2 years’ ITRs with financial statements and 6 months’ bank statements.
  3. Give the RC and the current insurance policy.
  4. For a top-up or balance transfer, give 6 months’ bank statements showing the EMI debits, as IDFC FIRST Bank asks.
  5. Sign the loan agreement and Form 34, the application to record a hypothecation on a registered vehicle. The bank files it with your RTO.
  6. The bank disburses the loan, and the RTO records the hypothecation on your RC.

HDFC Bank charges ₹600 as an RC collection fee and ₹650 for documentation. RTO charges are paid at actuals and differ by state.

Fees, prepayment and default

HDFC Bank’s schedule gives a fuller picture of what a car-backed loan costs beyond interest:

  • Processing fee: up to 1% of the loan, minimum ₹3,500, maximum ₹9,000, plus taxes.
  • Foreclosure: 6% of principal outstanding within the first year, 5% in months 13 to 24, and 3% after 24 months.
  • Part payment: allowed once a year and twice in the tenure, capped at 25% of principal outstanding, with a 5% or 3% charge.
  • Late payment: 18% a year (1.5% a month) on the overdue instalment.
  • Bounced payment: ₹450 each time.

IDFC FIRST Bank does not allow part prepayment on these loans and charges 5% plus GST to foreclose. RBI’s Pre-payment Charges Directions bar prepayment charges on floating-rate loans to individuals for non-business purposes, sanctioned or renewed from 1 January 2026. Lenders may still charge on fixed-rate loans, and the charge must appear in the sanction letter and Key Facts Statement. Axis Bank’s rate, for example, has no reset, so check whether yours is fixed or floating.

If you miss EMIs, late charges add up and the default is reported to credit bureaus. The lender can also act under the loan agreement to repossess the car, since it holds the hypothecation. For a smaller unsecured amount, compare personal loan interest rates; they need no car as security.

Removing hypothecation after repayment

  1. Close the loan and collect the no-dues certificate and NOC from the lender. HDFC Bank charges ₹250 for a duplicate NOC.
  2. Fill in Form 35, the notice of termination of hypothecation, signed by you and the lender.
  3. Apply to your RTO, online through Parivahan’s vehicle services where your state offers it, and pay the fee set under Rule 81 of the Central Motor Vehicles Rules, 1989.
  4. Submit the RC, insurance, PUC certificate, PAN or Form 60, and the lender’s NOC as the RTO asks.
  5. Collect the updated RC without the bank’s name, and ask your insurer to remove the lender from the policy.

Frequently asked questions

How much loan can I get against my car?

Published maximums range from 140% of valuation (ICICI Bank, Axis Bank) to 200% of market value (IDFC FIRST Bank, up to ₹50 lakh). The final amount depends on the car’s value and your income.

Can I get a loan against a car that already has a loan?

Yes, as a top-up from your current lender or a balance transfer with top-up from a new lender. HDFC Bank asks for a clean repayment record of 9 months for its top-up.

What is car loan refinance?

Lenders use the term for a loan on a car you already own outright, or for moving an existing car loan to a new lender. ICICI Bank’s refinance is only for cars with no outstanding loan.

Is a loan against car cheaper than a personal loan?

Not always. Published rates start around 13.75% to 13.99%, while some banks’ personal loans start lower for strong profiles, so compare the full cost including fees.

Which form is used for hypothecation on the RC?

Form 34 records a hypothecation after registration, and Form 35 records its termination once the loan is repaid.

Will I pay a foreclosure charge?

On fixed-rate loans, usually yes: HDFC Bank charges 3% to 6% and IDFC FIRST Bank 5% plus GST. RBI bars the charge on floating-rate non-business loans to individuals sanctioned from 1 January 2026.

Can a very old car be used?

Lenders limit car age. Axis Bank says the car should be no more than 10 years old, and RBL Bank caps the age at 12 years at the end of the loan.

Sources

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