Can I use collateral other than the car itself?

In most used car loans, the car itself is what the lender relies on as security. However, many borrowers wonder if they can offer something else instead, especially when the vehicle is older or the loan amount is higher than expected.

Banks and NBFCs almost always link the loan to the car itself. That’s the easiest asset for them to verify and control. The RC, insurance, and inspection report give them enough comfort to proceed.

A few lenders might look at an additional asset — like a fixed deposit in your name — but this is more of an exception. They do it mainly when the car’s value doesn’t fully support the loan amount or when your income profile needs a little backing. Property papers, gold, or business assets are rarely accepted for a used car loan. These belong to different loan categories, and mixing them complicates the approval.

If there’s a gap in eligibility, some people bridge the gap by bringing in a co-applicant with a steady income. It’s simpler than pledging another asset and moves faster in most cases.
In day-to-day lending, the car itself acts as the collateral. This keeps the process cleaner for everyone.