What is the difference between new and used car loans?
- Posted: 13th November, 2025
- Updated: 13th November, 2025
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There are some major differences between new and used auto loans in terms of the rates, amounts, term and approval process.
| Aspect | New Car Loan | Used Car Loan |
| Interest Rate | Generally lower (starts around 7.5% p.a.) | Higher (starts around 10% p.a.) due to higher risk |
| Loan Amount | Higher loan amounts, often up to 100% of car price | Usually lower amounts, up to around 90% of market value |
| Loan Tenure | Longer terms, up to 7 years | Shorter terms, typically up to 4-5 years |
| Approval Process | Faster, less paperwork, less inspection | Slower, requires detailed car inspection |
| Depreciation | Slower depreciation, car is brand new | Faster depreciation, already used |
| Down Payment | Lower or sometimes optional | Usually higher down payment required |
| Maintenance & Repairs | Covered under warranty initially | Higher chances of repairs in near term |
| Resale Value | Higher resale value | Lower resale value due to age |
New loans come with quieter approvals and longer tenures, making your monthly EMIs gentler. Used car loans, naturally, reflect the extra risk lenders take on—they demand slightly higher rates and tighter approval checks. So, if you want the latest tech and lower interest, new is the way. If budget’s a concern and a good deal is spotted on a well-kept car, used loans serve well.
Choose wisely, knowing what fits your financial situation and lifestyle best.
Popular FAQs
- Can I use collateral other than the car itself?
- Can I use business income proof for a personal car loan?
- Can I take a loan for a car under company ownership?
- Can I negotiate the used car loan interest rate before final approval?
- Can I get a used car loan for vintage or classic cars?
- Can I get a loan for a car that’s already under hypothecation?
- Can I get a loan for a car older than 10 years?
- Can I buy a used car without transferring the RC and still get a loan?
- Can I apply for a used car loan before choosing the car?
- Are there any loan options for pre-owned luxury cars?
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