Loan Against Car
A Loan Against Car is a secured loan where you use your car as collateral to get quick funds without selling it. Based on your vehicle’s value and your credit profile, lenders may offer up to 200% financing. The loan comes with minimal documentation, fast approval and no strict end-use restrictions, allowing you to meet urgent financial needs while still using your car.
| Loan Against Car | |
|---|---|
| Interest Rate | Starting from 11% p.a. |
| LTV Ratio | Up to 200% of the car value |
| Tenure | Up to 5 years |
| Processing Fees | Up to 2% of the loan amount |
Features & Benefits of Loan Against Car
High Loan Amount – Get financing of up to 200% of your car’s value, depending on the lender and your eligibility.
Flexible Repayment Tenure – Repay the loan over a period of up to 5 years.
No Strict End-Use Restrictions – Use the borrowed amount for any financial need, except speculative purposes.
Pre-Approved Loan Offers – Select existing customers may receive instant pre-approved deals.
Top-Up Facility – Easily avail additional funds through a top-up loan when needed.
Minimal Documentation – Enjoy easy paperwork, especially if you are an existing customer.
Quick Disbursal – Benefit from same-day or instant disbursal for eligible customers.
Loan Against Car Interest Rates
Interest rates for a Loan Against Car differ across lenders and are influenced by several factors. Your final rate will depend on your credit profile, repayment history, the lender’s risk assessment, and key details of the car used as collateral—such as its age, brand, model, and overall condition. Each financial institution has its own pricing policies, so the exact rate you receive may vary.
| Lenders | Interest Rates (p.a.) |
|---|---|
| HDFC Bank | 14% – 16% |
| IDFC FIRST Bank | 14% – 16% |
| AU Small Finance Bank | 14% – 21% |
Rates as of 13th June 2025
Loan Against Car EMI Calculator
A Loan Against Car EMI Calculator helps you estimate the monthly instalments you’ll pay when borrowing against your vehicle. By entering details like the loan amount, interest rate, and tenure, you can instantly know your EMI and plan your budget more effectively. The tool lets you try different combinations to find the ideal EMI and repayment period based on your financial capacity, ensuring a well-planned borrowing decision.
Eligibility Criteria for a Loan Against Car
The exact eligibility norms for a Loan Against Car may differ from one lender to another. However, most lenders generally follow these common criteria:
| Category | Details |
|---|---|
| Eligible Profiles | Individuals (Salaried and self-employed professionals/non-professionals) Non-individuals (Pvt. Ltd., Public Ltd., Partnership Firm, Proprietorship Firm, Co-operative societies, Trust and HUF) |
| Min. Age | 18-21 years when applying for the loan |
| Max. Age | 80 years at the end of the loan tenure |
| Employment Type | Salaried and Self-employed |
| Min. Salary | Rs 20,000 |
| Total Work Exp. | At least 1 year; some lenders also require work experience with the current employer |
| Annual Income | At least Rs. 2 lakh |
| Business Continuity | Business must be in existence at least for the past 2 years |
| Credit History | Available to new-to-credit customers & those with established credit history |
| Collateral | Most lenders accept all personal vehicles (cars) as collateral except those which are discontinued |
Which Cars/Vehicles Are Eligible for a Loan Against Car?
Vehicle eligibility can differ across lenders. While many lenders accept only privately owned passenger cars, others may also offer loans against select commercial vehicles. In general, the following types of vehicles are usually considered eligible:
Privately registered cars with valid ownership documents
Popular models or brands that are still in production
Well-maintained vehicles that are not very old (commonly under 10 years)
Vehicles with clear ownership, including a valid RC, insurance and other required papers
Who Should Consider a Loan Against Car?
Car owners needing quick funds – Ideal for individuals facing medical emergencies, sudden expenses, or planning major purchases. It allows you to access money without selling your vehicle.
Borrowers looking for a cheaper alternative to personal loans – As a secured loan, it usually offers lower interest rates and more flexible terms compared to unsecured personal loans.
Documents Required for Availing Loan Against Car
| Type | Details |
|---|---|
| Proof of Identity | PAN card, Aadhaar card, Passport, Voter ID, Driving license |
| Proof of Address | Aadhaar card, Driving license, Passport, Utility bills |
| Proof of Income for Salaried | Form 16, Salary slips, Bank account statements, etc. |
| Proof of Income for Self-employed | Last three months’ bank statements, Income Tax Returns (ITR) or audited Balance Sheet and Profit & Loss Statements |
| Vehicle Documents | Copy of the Vehicle Registration Certificate and Insurance |
| Other Documents | o Net banking or Debit
card details to set up e-Mandate o Proof of signature o Photographs |
Loan Against Car Processing Fees and Other Charges
The processing fees and additional charges for a Loan Against Car differ from one lender to another. These charges depend on factors such as your credit profile, loan amount, and the lender’s internal policies. Below is a general overview of the common fees you may come across:
| Particulars | Charges |
|---|---|
| Processing Fee | Up to 2% of loan amount |
| Prepayment Charges | Up to 6% of principal outstanding |
| Foreclosure Charges | Up to 5% of principal outstanding |
| Penal Interest | Up to 2% per month on the overdue instalment |
| RTO Transfer Charges | At actuals |
| Car Valuation/Asset Verification Charges | Rs. 750 per case |
| Stamp Duty (non-refundable) | At actuals |
FAQs
What is a Loan Against Car?
A Loan Against Car is a secured loan where you use your existing vehicle as collateral to borrow money. Instead of selling the car, you pledge it to the lender and receive funds based on its value.
How does a Loan Against Car work?
You submit your car details and documents to the lender. After valuation and approval, the lender disburses the loan while placing a lien on your vehicle. Since it’s a secured loan, you can often get a higher loan amount at lower interest rates compared to personal loans.
What is the repayment tenure?
Most lenders offer a repayment tenure of up to 5 years (60 months). The exact duration depends on the lender’s policies and the age/condition of your car.
Who is eligible to apply?
Any individual who owns a car, meets the lender’s minimum eligibility requirements, and can provide valid documents (RC, insurance, ID proof, etc.) can apply for a Loan Against Car.
Is a guarantor required?
No. A guarantor is not required because the car itself serves as the security for the loan.
Can I continue using my car after taking the loan?
Yes. You can keep and use your car throughout the loan tenure. However, the lender will mark a lien on the car’s registration, giving them the legal right to the vehicle until the entire loan is repaid. In case of default, the lender may repossess the car.