Used car loan is different from a new car loan in more than one aspect. The used car loan covers around 70% to 80% of the determined value of the car and the rest has to be paid by the borrower as the down payment. Many banks provide loan at on-road prices for new cars, but there is no such thing as an on-road price for a used car. The buyer will also have to pay for the road tax, insurance, registration charges and any other fees for the used car. The tenure of a used car loan is around 3 years varying from bank to bank and depends of the year of car manufacture. For example: ICICI bank offers a used car loan for vehicles which are not older than 7 years so if your model is a 2003 one you can get a loan tenure of 3 years, the closer the value of car model to current year the larger will the used car loan tenure be. The interest rates offered for a used car loan are also higher having values like 14% to 18% depending on various parameters such as the car model, year of manufacture, car condition and loan tenure. The other thing that makes a used car loan costlier is the processing fee charged on such loans. Varying from bank to bank this processing fee can range from 1% to 3% of the total loan amount. It is usually waived in case of new car loans.

Used car loans though have terms, which look pretty harsh when compared to a new car loan, but the very fact that one can enjoy the ownership and luxury of a car at a huge discount, makes a used car very popular and a used car loan mela the first choice for all such buyers.