How is the used car loan disbursed?

A used car loan is usually disbursed only after the lender completes a set of routine checks on both the borrower and the vehicle. The process usually starts once you submit basic documents such as identity and address proof, recent bank statements and the car’s registration certificate (RC) and insurance. These can be shared digitally or at a branch. The lender then arranges a physical inspection of the vehicle to verify details like the chassis and engine number, overall condition and insurance status. This helps confirm that the car matches the documents and is fit to be financed.

Once the checks are cleared, you’ll be asked to sign the loan agreement and the repayment mandate. This often happens through an OTP-based process. After this, disbursement depends on the purchase type. If you are buying from a dealer, the loan amount is credited directly to the dealer’s account. For a private sale, any existing loan on the car is settled first. And the remaining amount is paid to the seller. The lender’s charge is then generally endorsed on the RC.