Used Second-Hand Car Loan: Eligibility, Tenure, Fees and How to Apply

Yes, banks lend for second-hand cars. SBI finances up to 85% of a used car’s valuation and Bank of Baroda up to 75%, usually for at most 60 months, at rates from 9.45% to 15.60% a year at major banks in September 2026. You need a steady income, a credit score of about 700 or more, and the seller’s RC and insurance papers.

Used car loan: key facts

Who can get a second-hand car loan

Salaried people, pensioners, self-employed professionals, business owners and farmers can all apply. Banks look at four things: your age, income, credit score and the age of the car.

A score of 750 or more usually gets you near the bottom of a bank’s rate range. Our page on the credit score needed for a car loan explains how lenders read it.

Interest rates for 60 and 72 months

SBI, Bank of Baroda and PNB publish one rate range for used car loans, not separate rates by tenure, so a longer term mainly changes the EMI and the total interest. The table shows a ₹5 lakh loan at 10.45%, the start of SBI’s range, and at 13.51%, the average HDFC Bank reported charging on used car loans in April–June 2026.

Going from 60 to 72 months cuts the EMI by about ₹1,300 but adds ₹31,000 to ₹42,000 of interest. A 72- or 84-month term is also hard to get on a used car. SBI and Bank of Baroda stop at 60 months, and both shorten it further for older cars. For bank-by-bank rates, credit-score bands and fees, see our guide to second-hand car loan interest rates. Try other amounts in the EMI calculator.

Used car finance fees

RBI’s prepayment rules bar charges on floating-rate loans to individuals, so check whether your loan is fixed or floating before you sign.

Documents you need

1. KYC: PAN, and one proof of identity and address such as Aadhaar, passport, voter ID or driving licence. Existing KYC-compliant customers usually need not submit these again.
2. Bank statement for the last 6 months.
3. Income proof. Salaried: latest salary slips and Form 16 or ITRs for 2 years at SBI (Bank of Baroda asks for 1 year’s ITR and 3 months’ slips). Self-employed: ITRs for 2 years, with audited accounts at SBI.
4. Car papers: a valuation report or quotation, and copies of the seller’s RC and motor insurance.
5. Proof of your down payment (the margin money receipt).
6. Two passport-size photographs.

Before the bank pays out, SBI also asks for the sale agreement or the seller’s undertaking. If the seller still had a car loan, it needs that lender’s clearance letter and Form 35.

How to get a loan for a second-hand car

1. Check your credit score and correct any errors.
2. Pick the car and check its age against the bank’s limit, since this caps your tenure.
3. Get the car valued and collect copies of the seller’s RC and insurance.
4. Apply at the branch, on the bank’s website or app, or through the dealer, with your documents.
5. Pay your share of the price, sign the loan agreement and give a NACH mandate for the EMIs.
6. Transfer ownership at the RTO using Form 29 and Form 30. The lender’s hypothecation is recorded on the RC using Form 34.
7. Have the insurance moved to your name, with the lender recorded as financier.
8. After the last EMI, collect the no-objection certificate and file Form 35 to remove the hypothecation from your RC.

For more on how these loans work, see our used car loans guide.

Frequently asked questions

Is a loan available for a second-hand car?

Yes. SBI, Bank of Baroda, PNB, HDFC Bank and Axis Bank all offer used car loans. SBI lends up to 85% of the car’s valuation.

What is the interest rate on a second-hand car loan?

At major banks in September 2026, from 9.45% at PNB for scores of 750 and above to 15.60% at the top of SBI’s range.

What is the used car loan interest rate for 60 months?

SBI, Bank of Baroda and PNB do not publish separate rates by tenure. At 10.45%, a ₹5 lakh loan over 60 months costs ₹10,735 a month.

Can I get a used car loan for 72 months?

Not at SBI or Bank of Baroda, which cap it at 60 months. HDFC Bank lists terms of up to 84 months, provided the car is no older than 10 years when the loan ends.

What fees are charged on used car finance?

A processing fee of 0.50% to 1% with limits, a valuation fee of about ₹750, stamp duty and RTO charges, and foreclosure charges on fixed-rate loans at some banks.

How old can the car be?

At SBI the loan tenure is 10 years minus the car’s age. At Bank of Baroda, the tenure plus the car’s age cannot exceed 96 months.

Sources

• Certified Pre Owned Car Loan: eligibility and documents — State Bank of India (checked 17 Sep 2026)
• Auto loans interest rates — State Bank of India (checked 17 Sep 2026)
• Baroda Auto Loan for Pre-owned Car — Bank of Baroda (checked 17 Sep 2026)
• Interest rates on retail advances — Punjab National Bank (checked 17 Sep 2026)
• Used car loan interest rates, fees and charges — HDFC Bank (checked 17 Sep 2026)
• Used car loan interest rates and charges — Axis Bank (checked 17 Sep 2026)
• Form 34: entry of hypothecation after registration — Parivahan, MoRTH (checked 17 Sep 2026)
• Form 35: termination of hypothecation — Parivahan, MoRTH (checked 17 Sep 2026)
• Pre-payment Charges on Loans Directions, 2025 — Reserve Bank of India (checked 17 Sep 2026)