Car Loan — how it works
A car loan is secured against the vehicle itself, so approval is usually quicker and documentation lighter than a home loan — but the car is also a depreciating asset, so it's worth borrowing carefully.
Typical numbers
How a car loan works
1. Choose new or used
New cars typically get a higher loan-to-value and lower rate than used cars, which carry more valuation and resale risk for the lender.
2. Pay the down payment
You usually cover 10–20% of the on-road price yourself; the loan covers the rest.
3. The vehicle is hypothecated
The lender's name is recorded against the vehicle's registration until the loan closes, so you can't sell it free and clear until then.
4. Fixed EMIs over a short term
Most car loans use a fixed rate, so the EMI stays the same for the whole tenure — usually much shorter than a home loan.
Eligibility & documents lenders usually ask for
- Proof of stable income covering the EMI alongside existing obligations
- Credit score/history
- Identity, address and bank statement proof
- For used cars: the vehicle's age and condition, since older vehicles may get a shorter tenure or lower loan-to-value
Fees to check before you sign
- Processing fee
- Hypothecation / RC endorsement charges
- Prepayment or foreclosure charges — more common on fixed-rate car loans than on floating-rate home loans
- Add-on insurance or extended warranty sometimes bundled — check whether it's optional
Before you edit this page
The loan cards above are placeholders — lender names, rates, and links are marked REPLACE and are not real. Fill each one in from your actual affiliate network or direct lender partnership with current, verified terms, and re-check them periodically since rates change often.
How to compare car loan offers
Compare the interest rate, processing fee, and prepayment charges together — a slightly higher rate with no prepayment penalty can cost less overall if you plan to close the loan early.
Use a car loan responsibly
Since a car loses value over time, avoid borrowing more than the vehicle will be worth partway through the loan term, and keep the tenure short enough that you're not still paying off a car you no longer own.
Frequently asked questions
Is it cheaper to finance a used car or a new one? New car loans usually carry lower rates and higher financing, but the total cost depends on the vehicle price and tenure — compare the total repayment, not just the rate.
Are the offers on this site guaranteed? No. Eligibility, approval, rates and terms are determined by the relevant lender and can change at any time.