What Is an Auto Loan?
An Auto Loan is a type of secured or unsecured loan used to purchase new or used vehicles including cars, bikes, and commercial vehicles. Banks, NBFCs, and fintech lenders offer auto loans with flexible repayment options and competitive interest rates.
Key Features of Auto Loans
- Financing for new and used vehicles
- Flexible loan tenure: 12–84 months
- Low to moderate interest rates
- Quick approval depending on lender
- EMI options based on income and tenure
- Loan can include insurance and accessories in some cases
Types of Auto Loans 2026
| Loan Type |
Vehicle |
Interest Rate (p.a.) |
Tenure |
| New Car Loan |
Brand new cars |
8.5% – 11% |
12–84 months |
| Used Car Loan |
Pre-owned cars (up to 7–10 years old) |
9% – 12% |
12–60 months |
| Two-Wheeler Loan |
Bikes, scooters |
9% – 14% |
12–60 months |
| Commercial Vehicle Loan |
Trucks, vans, mini-buses |
8% – 11% |
12–72 months |
| Loan Against Vehicle |
Car or bike as collateral |
7% – 10% |
12–48 months |
Eligibility Criteria
- Indian citizen with valid KYC
- Age: 21–65 years
- Stable income or business revenue
- Good credit score preferred (700+)
- For used vehicles, vehicle age limit applies
Documents Required
- Identity proof (Aadhaar, PAN, Passport)
- Address proof (Utility bills, Voter ID)
- Income proof (Salary slips, Bank statements, ITR)
- Vehicle quotation or proforma invoice
- Loan application form
Auto Loan Example
If you take a ₹7 lakh car loan at 9% interest for 60 months:
- Monthly EMI: ₹14,400 approx.
- Total interest payable: ₹1,64,000 approx.
- Total repayment: ₹8,64,000 approx.
Advantages and Disadvantages
Advantages
- Immediate vehicle ownership
- Flexible repayment terms
- Competitive interest rates
- Can finance insurance and accessories
Disadvantages
- EMI burden for several years
- Vehicle depreciation reduces resale value
- Default may result in repossession
Frequently Asked Questions (FAQs)
Can I get an auto loan for a used vehicle?
Yes, most lenders provide loans for used cars and bikes within age limits.
What is the typical interest rate?
Rates vary from 8.5% to 12% depending on the lender, vehicle, and credit profile.
Is prepayment allowed?
Yes, partial or full prepayment is allowed by most lenders, sometimes with nominal charges.
Can the loan include insurance?
Some lenders allow including insurance premium and accessories as part of the loan.
Author: All Finance Store Auto Loan Team
Expertise: Car, Bike & Vehicle Loan Advisory
Last Updated: January 2026
Disclaimer: This page is for informational purposes only. Auto loan terms, interest rates, and eligibility vary by lender. Verify details with banks or official lenders before applying.