BAJAJ FINSERV DIRECT LIMITED
✓ Interest Rates Starting @ 10.50% ✓ Loan of up to ₹77 Lakhs ✓ Quick Disbursal

Used Car Loan Eligibility Criteria & Documents Required

It is important to know about the eligibility criteria and necessary paperwork that play a pivotal role in your used car loan application

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Interest Rate

10.50% p.a. Onwards
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Loan Tenure

Up to 6 Years

Loan Amount

Up to ₹77 Lakhs

A used car loan helps you finance the purchase of a pre-owned vehicle without bearing the full cost upfront. To qualify for this loan, you need to meet certain eligibility criteria set by the lender. You also have to submit specific documents to support your application. 

Understanding these requirements can make the process smoother and improve your chances of approval.

Eligibility Criteria for a Used Car Loan

The second-hand car loan eligibility criteria may vary among lenders. Here are some common requirements:

Salaried Individuals

  • Minimum age: 21 years
  • Maximum age at loan maturity: 60 years (conditions apply)
  • Minimum net annual salary: ₹2.4 Lakhs (for select models) or ₹3 Lakhs (for specific models)
  • Income verified through latest salary slip, Form 16, or last 3 months’ bank statements
  • At least 1 year of continuous employment
  • CIBIL Score - 700 or higher

Self-Employed Individuals

  • Minimum age: 21 years
  • Maximum age at loan maturity: 65 years
  • Minimum net annual business income: ₹2 Lakhs (for selected models) or ₹3.5 Lakhs (for others)
  • Minimum 2 years in the same line of business
  • CIBIL Score - 700 or higher

Additional Used Car Loan Eligibility Requirements

Self-employed individuals applying for a used car loan need to meet specific eligibility criteria based on their business type, income, and communication details. Below are the key requirements:

  • Sole Proprietors

Must be aged 25–65, with at least 3 years in business and an annual income of ₹2.5 Lakhs or more.

  • Partnership Firms

Partners must earn at least ₹2.5 Lakhs annually with a minimum firm turnover of ₹4.5 Lakhs. A residence or office landline is required; a post-paid mobile (3+ months active) is acceptable if only one landline is available.

  • Private Limited Companies

Owners must have a minimum annual income of ₹2.5 Lakhs and an office landline connection.

  • Public Limited Companies

Directors need an annual income of ₹2.5 Lakhs and an office landline.

  • Hindu Undivided Family (HUF)

Minimum income required is ₹2.5 Lakhs. A landline at both residence and office is necessary; a 3-month-old post-paid mobile is acceptable if only one landline is present. The Karta must apply as a co-applicant.

Documents Required for a Used Car Loan

Here is a list of documents required for the used car loan you are typically asked to furnish when applying for used car finance:

General Documents

  • Any one KYC document:
    • Aadhaar Card
    • Passport
    • Voter ID
  • PAN Card
  • Employee ID Card
  • Vehicle Registration Certificate
  • Vehicle Insurance Copy

For Salaried Individuals

  • Salary slips for the last 2 months
  • Bank account statements for the last 3 months

For Self-Employed Individuals

  • Income Tax Return (ITR) proof for the last 2 years
  • Bank account statements for the last 3 months

You may also be required to provide your driving licence, a letter from NPR, and your NREGA Job card, depending on the lender’s requirements.

Factors Affecting Your Used Car Loan Eligibility

Here are some factors which typically tend to affect your pre-owned car loan eligibility:

  • Credit Score

Your credit score reflects your financial credibility. A higher score improves your chances of approval and may lead to better used car loan interest rates, while a low score could result in rejection or higher costs.

  • Income and Employment Status

Lenders assess your income level and job stability to gauge your repayment ability. A steady job or a consistent source of income improves your second-hand car loan eligibility.

  • Debt-to-Income (DTI) Ratio

This ratio represents your monthly debt obligations compared to your income. A lower DTI ratio indicates better repayment capacity and improves your chances of securing a loan.

  • Down Payment

A larger down payment reduces the loan amount and the lender’s risk, making you more eligible and potentially securing better loan terms.

  • Age and Condition of the Car

Lenders prefer financing relatively newer used cars in good condition, as they have higher resale value. Older vehicles or those in poor condition may reduce loan eligibility or attract higher interest rates.

  • Loan Term

Shorter loan terms generally indicate quicker repayment, reducing the lender’s risk. This improves your old car loan eligibility, enabling you to negotiate for lower interest rates and other terms. Meanwhile, longer terms may help you enjoy lower EMIs but could also affect the chances of loan approval.

  • Lender Requirements

Different lenders have specific used car loan eligibility criteria, such as income thresholds, vehicle age limits, or minimum CIBIL scores. Meeting these requirements is essential for loan approval.

Tips to Improve Your Used Car Loan Eligibility

Here are some simple strategies you can employ to improve your eligibility for a used car loan:

  • Improve Your Credit Score

Pay off your outstanding dues, resolve any errors on your credit report, and avoid missing future payments. This can help improve your CIBIL score, increasing your chances of loan approval.

  • Increase Your Income or Job Stability

Demonstrate steady income or job stability, as lenders are more likely to approve applicants with consistent financial resources. Also, mention any secondary sources of income you may have to provide a complete overview of your income and repayment capability.

  • Lower Your Debt-to-Income (DTI) Ratio

Reduce your existing debt obligations to improve your DTI ratio to fall within the range of about 20% to 40%.  This helps showcase a better repayment capacity, reducing the associated risk for the lender.

  • Save for a Larger Down Payment

Contribute a higher down payment to lower the loan amount. This reduces the lender’s risk, making loan approval more likely.

  • Choose a More Affordable Car

Opt for a pre-owned vehicle within a reasonable budget to ensure your loan request aligns with your financial capacity.

  • Opt for a Shorter Loan Term

Select a shorter repayment period, as lenders often favour quick repayment timelines, reducing the perceived risk.

  • Avoid Major Financial Changes Before Applying

Hold off on big financial moves, like taking on a new personal loan, as these could affect your creditworthiness and second-hand car loan eligibility.

  • Compare Lenders

Explore used car loan offers from different lenders to identify the best terms and eligibility criteria that align with your needs and preferences.

  • Be Transparent and Provide Complete Documentation

Ensure all documents, such as income proofs and vehicle details, are accurate and complete to avoid delays or rejection. If self-employed, you may be required to submit certain business proofs to show the financial stability of your company.

Frequently Asked Questions

Who is eligible for a used vehicle loan?

Individuals aged 18-80 with Indian citizenship and a CIBIL score of 720 or more are usually eligible for this loan. Both self-employed and salaried applicants can apply.

Important documents for a second-hand vehicle loan include KYC documents, employee ID cards, income proof, and car-related documents.

As per second-hand car loan eligibility criteria, salaried applicants need to have a minimum monthly income of ₹20,000.

Generally, you are required to submit income proofs when applying for a pre-owned car loan. Reach out to your lender and discuss alternatives if you do not have the requested income proof.

A used car loan has stricter requirements than a new car loan. The lender limits the age and condition of the vehicle being financed, directly impacting used car loan eligibility. Lenders consider new vehicles to be less risky assets, so new car loans are comparatively easier to obtain. 

A new car loan also requires a higher down payment than the eligibility requirement for a used car loan.

Most lenders approve loans for cars that are no older than 12 years.

Yes, you often need to provide the original documents—not just copies—for a used automobile loan. Lenders need these original documents to confirm the legitimacy of your identification, residence, income, and the vehicle's registration and insurance.

To take a used car loan, you need to submit KYC documents such as Aadhaar Card, Passport, Voter ID, PAN Card, or Employee ID, along with the vehicle’s Registration Certificate and insurance copy.

Salaried individuals need to be aged 21–60 years, have at least one year of work experience, and meet the lender’s income criteria. Required documents include salary slips for the last two months and bank statements for the last three months.

Self-employed individuals must be aged 25–65 years, have a business vintage of at least two years, and meet the income requirement. They also need to submit bank statements for the last three months.

To meet the used car loan eligibility criteria, your CIBIL score needs to be at least 720 or more.

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