Used-car finance is priced several points above new-car rates, with shorter tenures and lower funding — because the collateral is harder to value and depreciates faster. The constraint most buyers hit is not the rate but the age cap: many lenders will not finance a car that would be older than 8–10 years at loan maturity.
| Typical funding on a used car | 70 – 85 % of valuation |
|---|---|
| What it means | Of the lender’s valuation, which is usually below the asking price. |
as of 2026-08-15 · Lender product terms · reported
What to know
The funding percentage applies to the lender’s valuation, not the seller’s price. Work the EMI on the amount actually funded rather than the sticker price. On a private sale that gap can be wide, and the difference lands on your down payment. Get the valuation before you commit to the purchase price.
Insist on the paperwork before the money moves: registration certificate, insurance history, a clear hypothecation status from any earlier loan, and confirmation there are no outstanding challans. A car still hypothecated to a previous lender cannot be transferred cleanly, and that is discovered at the RTO, after payment.
Frequently asked questions
What is the interest rate on a used car loan?
Typically several percentage points above a new-car loan, reflecting faster depreciation and harder valuation. The rate rises with the age of the vehicle.
How old a car can I finance?
Most lenders cap the vehicle age at maturity — commonly 8 to 10 years — which limits both which cars qualify and how long a tenure you can take on an older one.
Can I get a loan for a car bought from a private seller?
Yes, though it is more paperwork than a dealer purchase. The lender will want the registration certificate, insurance, a valuation, and confirmation that any earlier hypothecation has been removed.
Sources
- Lender published rate cards — Home, personal, vehicle and education loan rate cards — August 2026 — as of 2026-08-15
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