Need urgent funds but don’t want to sell your car? A loan against vehicle might be the solution you’re looking for. This option lets you borrow money using your existing car as collateral, giving you fast access to liquidity without giving up ownership.
Whether it’s for medical expenses, home upgrades, or covering a short-term business gap, a loan against vehicle can offer flexibility and convenience when you need it most.
Key Benefits of a Loan Against Vehicle
- Quick Approval – Get access to funds typically within 48-72 hours.
- Lower Interest Rates – Secured loans usually come with lower interest compared to unsecured personal loans.
- Retain Car Ownership – You continue to use your car while repaying the loan.
- Flexible Tenure – Ranging from 12 to 60 months depending on the lender.
- Minimal Paperwork – Digital lenders like Car Par Loan streamline the process.
Loan Against Vehicle: Eligibility and Documents
To apply for a loan against a vehicle, you typically need to meet the following criteria:
- Age: 21 to 65 years
- Ownership: Vehicle should be registered in your name
- Vehicle Age: Generally less than 10 years old
- Income: Proof of income may be required
Documents Required:
- RC (Registration Certificate) of the vehicle
- KYC documents (Aadhar, PAN)
- Income proof (salary slip or ITR)
- Insurance copy
- Photographs
Loan Against Vehicle Interest Rates in 2025
Interest rates depend on the car’s age, your credit profile, and the lender. In 2025, average interest rates on loan against vehicle range between 9.5% to 14.5% per annum.
- Good Credit (750+): As low as 9.5%
- Average Credit (650-750): Around 11% to 13%
- Low Credit (<650): Up to 14.5% with additional terms
Car Loan vs Loan Against Car
Both options serve different needs. Here's a comparison to help you understand better:
Car Loan
- Used for purchasing a new or used car
- Ownership transfers to borrower after loan repayment
- Collateral: The car being purchased
- Processing time: Generally longer
Loan Against Car
- Used to raise funds using your existing car
- Ownership remains with the borrower
- Collateral: Your already owned vehicle
- Processing time: Faster (typically 48–72 hours)
How to Apply for a Loan Against Car
Follow this step-by-step guide to apply easily:
- Check Eligibility – Ensure your car is eligible (age, ownership).
- Visit a Trusted Lender – Platforms like Car Par Loan offer digital applications.
- Submit Application – Fill out basic details and upload documents.
- Vehicle Inspection – Some lenders require physical verification.
- Loan Approval – Once verified, approval and disbursal are typically quick.
Car Loan: When Is It Better?
You should consider a car loan when:
- You're purchasing a new or used car.
- You want a structured EMI plan.
- You're not in urgent need of funds but want to own a vehicle.
Loan Against Car: When Should You Consider It?
You should consider a loan against car when:
- You already own a car and need liquidity.
- You want to avoid selling your vehicle.
- You need quick funding for emergencies or short-term projects.
How to Maximise Your Benefits
To get the best deal on your loan against vehicle, follow these best practices:
- Compare rates on platforms like Car Par Loan
- Maintain a good credit score
- Choose shorter tenures to reduce total interest
- Review all terms carefully before signing
FAQs
1. Can I apply for a loan against vehicle online?
A: Yes, platforms like Car Par Loan offer 100% digital applications.
2. What happens if I miss a payment?
A: Lenders may charge late fees, and it may impact your credit score.
3. Is my car safe during the loan period?
A: Yes, you retain full usage of your car while repaying the loan.
4. How long does approval take?
A: Typically, within 48–72 hours if documents and eligibility are in order.
5. Can I repay early?
A: Yes, but check prepayment charges with your lender beforehand.