What is the interest rate on a used car loan?

The interest rates on used car loans in India bounce around of about 10% to 12% p.a., which is not uncommon for most mainstream lenders, however, the interest rate provided to you may vary higher based on your personal financial information and also your choice of vehicle.

A number of variables will impact your final rate of interest. First and foremost your credit score. A high credit score may potentially deliver a lower interest rate because it indicates lower risk to lenders. A lower credit score may result in a higher rate of interest from lenders. Other factors lenders will consider will be your income level, how much you wish to borrow, how long you wish to borrow for and how old is the vehicle you want to buy. If you can contribute a larger amount of cash upfront, sometimes lenders may reduce the applicable interest rate also.

The age of the vehicle you are buying is important. The older the vehicle, the riskier it is in the eyes of lenders, therefore you will usually pay a higher rate based on older aged cars.

For the duration of your loan most lenders will offer a fixed rate interest, however some lenders may provide you with a variable rate if the market rate changes as an example. The rate of interest is a key consideration of your overall loan cost, therefore even a small difference will add up over the course of the loan. Make you read the fine print and ask about any charges or fees that may apply, so there is no ambiguity in what you wish to sign up for.