Yes, you can take a personal loan for car purchase in India. It works best for a used car that banks won’t finance (older than 5–7 years, private seller, low value) or for paying the down payment on a new car. Personal loan rates start around 9.99%–10.90% p.a. in 2026, versus about 8.15%–9.85% for a new car loan and 10.50%–17% for a used car loan. You get ₹50,000 to ₹40 lakh with no hypothecation on the RC, so you own the car outright from day one.
Introduction
You’ve found the car. Maybe it’s a 7-year-old hatchback from a neighbour, or the new SUV you’ve been saving for. Either way, there’s a gap between what you have and what the car costs.
That’s where a personal loan for car comes in. It isn’t the right tool for every buyer, but in two situations it’s often the smartest one: buying a used car that lenders won’t touch, and covering the down payment on a car loan. This guide shows you exactly when it makes sense, what it costs in 2026, and how to apply online through Ruloans.
What Is a Personal Loan for Car?
A personal loan for car is an unsecured loan you use to pay for a vehicle, fully or partly. The lender doesn’t hold the car as security, so there’s no hypothecation on the RC and no valuation of the car.
A regular car loan is secured against the vehicle. The bank’s name goes on the registration certificate until you repay. A personal loan for car purchase is different: the money lands in your bank account, and you pay the dealer or seller like a cash buyer.
Here’s how it works in practice:
- You apply based on your income, CIBIL score and existing EMIs.
- The lender approves an amount, typically ₹50,000 to ₹40 lakh.
- Funds are disbursed to your account, often within 24–72 hours.
- You buy the car and register it in your name, with no lender lien.
- You repay through fixed EMIs over 1–5 years (some NBFCs go to 7).
Because there’s no collateral, interest is higher than on a secured car loan. You’re paying extra for speed, flexibility and clean ownership.
Also Read: Personal Loan for Bike: Get ₹20,000 to ₹5 Lakh for New or Used Bikes
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Personal Loan for Car vs Car Loan: Which Is Better?
A car loan is cheaper for a new car because it’s secured, with rates from about 8.15% p.a. A personal loan for car is better when the car doesn’t qualify for a car loan, when you want no lien on the RC, or when you need cash for the down payment.
| Feature | Personal Loan for Car | New Car Loan | Used Car Loan |
| Interest rate (2026) | ~9.99%–24% p.a. (banks); up to ~31% at some NBFCs | ~8.15%–11% p.a. | ~10.50%–17% p.a. |
| Collateral | None | Car hypothecated | Car hypothecated |
| Funding | Up to your eligibility, ₹50,000–₹40 lakh | Up to 90–100% of on-road price | Usually 70–85% of valuation |
| Car age limit | None | New only | Car age + tenure often capped at 8–10 years |
| Down payment | Not required | 0–20% | 15–30% |
| Tenure | 1–5 years (up to 7 at some NBFCs) | Up to 7 years | Up to 5 years |
| RC ownership | Clean from day one | Lender lien until closure | Lender lien until closure |
| Valuation/inspection | Not needed | Not needed | Mandatory |
| Disbursal speed | 24–72 hours | 2–5 days | 3–7 days |
Sources: lender rate pages and aggregators compiled in Sources below; your actual rate depends on CIBIL score, income and employer.
Also Read: Used Car Loan or Personal Loan… What’s your choice?
Can I Take a Personal Loan for Used Car Purchase?
Yes. A personal loan for used car purchase is often easier than a used car loan because the lender doesn’t care about the car’s age, model, seller or valuation. It only checks your income and credit profile.
Used car loans come with rules. SBI caps used car loan tenure at 5 years, banks typically fund only 70–85% of the assessed value, and many lenders won’t finance cars older than 5–7 years. A personal loan for used car skips all of that.
| Do You Know? The Maruti Suzuki Swift, Wagon R 1.0, Honda City, Hyundai i10, Grand i10 and Swift Dzire make up 20.3% of used cars sold on one of India’s largest resale platforms. The Swift alone accounts for 4.8%. Maruti Suzuki has about 33% of all used car sales on the platform, and Hyundai is second at 22%. Many of these are older, lower-value hatchbacks, which is exactly the kind of car where a personal loan for used car works better than a used car loan. Source: Business Standard (ANI), September 18, 2026, citing Cars24 transaction data up to July 2026 |
Also Read: Which bank is best for used car loan?
When Is a Personal Loan for Used Car Better Than a Used Car Loan?
Pick a personal loan for used car when the car is old, cheap, bought from a private seller, or when you need money within a day or two.
- The car is 7+ years old. Most used car loan schemes reject it or offer a very short tenure.
- You’re buying from a private seller. Lenders prefer certified dealers; private sales mean extra paperwork and inspections.
- The car costs under ₹3 lakh. Processing a small used car loan isn’t worth it for many banks, so you’ll see higher rates anyway.
- The deal is time-sensitive. A good used car sells fast. Pre-approved personal loans can disburse within hours.
- You want a clean RC. No hypothecation means no NOC hunt when you sell later.
When Should You Choose a Used Car Loan Instead?
Choose a used car loan when the car is under 5 years old, comes from a certified dealer, and your rate offer is at least 1–2% lower than your personal loan quote.
Here’s a real comparison for a ₹5 lakh used car over 5 years:
| Option | Loan Amount | Rate | EMI | Total Interest | Your Cash Needed |
| Used car loan (80% funding) | ₹4,00,000 | 12.5% | ₹8,999 | ₹1,39,951 | ₹1,00,000 |
| Personal loan for used car (full) | ₹5,00,000 | 13% | ₹11,377 | ₹1,82,592 | ₹0 |
| Personal loan for used car (same ₹4 lakh) | ₹4,00,000 | 13% | ₹9,101 | ₹1,46,074 | ₹1,00,000 |
| Personal loan, 750+ CIBIL | ₹5,00,000 | 11% | ₹10,871 | ₹1,52,273 | ₹0 |
EMIs are calculated on a reducing balance; processing fees and insurance are excluded.
Also Read: 4 Reasons Which May Be The Reason Of Your Used Car Loan Rejection
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Can I Use a Personal Loan for Car Down Payment?
Yes. A car down payment loan is simply a personal loan used to pay the 10–20% upfront amount that your car loan doesn’t cover. It’s legal and common, but you’ll carry two EMIs at once, so lenders check that both fit within roughly 50–60% of your monthly income.
Most banks fund 80–90% of the on-road price on a new car loan. On a ₹10 lakh car, that leaves ₹1–2 lakh to pay yourself. If your savings are locked in an FD or you’d rather keep an emergency fund, a car down payment loan bridges that gap.
| Do You Know? September 2026 was the best September ever for car retail in India. FADA reported 4,27,213 passenger vehicles sold, up 32.10% year on year. Urban and rural sales grew at almost the same pace. Part of the jump is because buyers in September 2025 delayed purchases until GST 2.0 took effect. With festive demand building, many buyers are using a car down payment loan so they can book now without emptying their savings. Source: Autocar Professional, FADA September 2026 retail data |
How Much Does a Car Down Payment Loan Cost?
On a ₹10 lakh new car, a ₹2 lakh car down payment loan at 13% for 3 years adds about ₹42,600 in interest and raises your total EMI to ₹23,346 for the first 3 years.
| Plan for a ₹10 lakh on-road car | EMI (Years 1–3) | EMI (Years 4–5) | Total Interest | Cash From You |
| Car loan ₹9L at 9% (5 yrs) + ₹1L own savings | ₹18,683 | ₹18,683 | ₹2,20,951 | ₹1,00,000 |
| Car loan ₹8L at 9% (5 yrs) + car down payment loan ₹2L at 13% (3 yrs) | ₹23,346 | ₹16,607 | ₹2,38,997 | ₹0 |
| Full personal loan for car ₹10L at 12% (5 yrs) | ₹22,244 | ₹22,244 | ₹3,34,667 | ₹0 |
All figures use reducing-balance EMI; fees, insurance and GST on fees are excluded.
Is a Car Down Payment Loan a Good Idea?
It’s a good idea if your combined EMIs stay under 40% of take-home pay and you can close the personal loan within 2–3 years. It’s a bad idea if it stretches your budget just to buy a pricier variant.
Use a car down payment loan when:
- Your salary is stable and the combined EMI is comfortable.
- You want to keep savings liquid for emergencies.
- A festive or year-end discount makes waiting costly.
Avoid it when:
- You’d need to skip other savings to manage both EMIs.
- Your CIBIL score is below 700; you’ll pay 16%+ on the personal loan.
- You’re borrowing to upgrade beyond what you’d planned.
One honest tip: keep the car down payment loan tenure short. A 2–3 year tenure keeps interest low, and the extra EMI drops off well before the car loan ends.
Also Read: 7 Most Common Car Loan Mistakes to Avoid
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*Interest rate subject to eligibility & credit profile. T&C apply.
Personal Loan for Car Interest Rates in 2026
In October 2026, a personal loan for car starts at around 9.99%–10.90% p.a. at major banks and can go above 24% for weaker profiles. New car loan rates start near 8.15%, and used car loan rates start near 10.50%.
| Lender | Personal Loan (p.a.) | New Car Loan (p.a.) | Used Car Loan (p.a.) |
| SBI | 10.00%–15.00% | 8.70%–9.85% | From 10.50% |
| HDFC Bank | 10.90%–24.00% | From 8.15% | From 11.25% (rack rate) |
| ICICI Bank | 10.80%–16.65% | From 8.50% | From 11.00% |
| Axis Bank | From 11.49% | — | 12.95%–14.55% |
| Kotak Mahindra Bank | — | From ~8.75% | 12.00%–17.00% |
| Bajaj Finance (NBFC) | 10.00%–31.00% | — | — |
Rates are indicative, compiled from lender and aggregator pages listed in Sources; your final rate depends on CIBIL score, income, employer and loan amount.
Also Read: SBI vs HDFC vs ICICI Personal Loan – Interest Rate & Eligibility Comparison 2026
How Does the October 2026 Repo Rate Hike Affect Your Car Loan?
The RBI raised the repo rate by 25 bps to 5.50% on 7 October 2026, its first hike since February 2023. Floating-rate car loans linked to the repo rate may cost more within a quarter; most personal loans for car are fixed-rate, so your EMI stays locked once you borrow.
Two practical points:
- Lock in a fixed rate early. Several economists expect another hike in December, so today’s personal loan quote may be lower than next quarter’s.
- Prepayment rules differ. Since 1 January 2026, RBI bars prepayment charges on floating-rate loans to individuals for non-business use. Fixed-rate personal loans can still carry foreclosure fees, so check the Key Facts Statement.
Also Read: Interest Rates Hiked? Be prepared in Advance with these steps!
Personal Loan for Car EMI: ₹1 Lakh to ₹10 Lakh
A ₹5 lakh personal loan for car costs ₹10,871 a month at 11% for 5 years, or ₹12,159 at 16%. Every ₹1 lakh borrowed adds roughly ₹2,170–₹2,430 to a 5-year EMI, depending on your rate.
| Loan Amount | 11% / 3 yrs | 11% / 5 yrs | 13% / 5 yrs | 16% / 5 yrs | Total Interest (13%, 5 yrs) |
| ₹1,00,000 | ₹3,274 | ₹2,174 | ₹2,275 | ₹2,432 | ₹36,518 |
| ₹2,00,000 | ₹6,548 | ₹4,348 | ₹4,551 | ₹4,864 | ₹73,037 |
| ₹3,00,000 | ₹9,822 | ₹6,523 | ₹6,826 | ₹7,295 | ₹1,09,555 |
| ₹5,00,000 | ₹16,369 | ₹10,871 | ₹11,377 | ₹12,159 | ₹1,82,592 |
| ₹7,00,000 | ₹22,917 | ₹15,220 | ₹15,927 | ₹17,023 | ₹2,55,629 |
| ₹10,00,000 | ₹32,739 | ₹21,742 | ₹22,753 | ₹24,318 | ₹3,65,184 |
EMI formula used: EMI = P × r × (1 + r)^n ÷ [(1 + r)^n − 1], where r is the monthly rate and n is the number of months.
Also Read: Lowest EMI Personal Loan for ₹5 Lakh – Compare & Apply
How Much Personal Loan for Car Can I Get on My Salary?
Most lenders let your total EMIs reach about 50% of net monthly income. With no existing EMIs, a ₹50,000 salary supports a personal loan for car of roughly ₹11.2 lakh at 12% over 5 years.
| Net Monthly Salary | Max EMI (50% FOIR) | Approx. Loan at 12%, 5 yrs |
| ₹25,000 | ₹12,500 | ₹5.6 lakh |
| ₹40,000 | ₹20,000 | ₹9.0 lakh |
| ₹50,000 | ₹25,000 | ₹11.2 lakh |
| ₹75,000 | ₹37,500 | ₹16.9 lakh |
| ₹1,00,000 | ₹50,000 | ₹22.5 lakh |
These are illustrative ceilings. Subtract any existing EMIs first, and expect banks to apply 40–60% FOIR depending on your income band and employer category.
Also Read: ₹10 Lakh Personal Loan: Salary Needed & Eligibility 2026
Personal Loan for Car Tenure: 3 Years or 5 Years?
A shorter tenure saves interest; a longer one lowers EMI. On ₹5 lakh at 11%, a 3-year term costs ₹89,297 in interest versus ₹1,52,273 over 5 years, a saving of ₹62,976.
Cars lose value every year, so try not to be paying for a car long after it’s lost most of its worth. For a personal loan for used car, 3 years is often the sweet spot.
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Personal Loan for Car Eligibility
You’re generally eligible for a personal loan for car if you’re 21–60 years old, earn a steady income (often ₹15,000–₹25,000 a month minimum), have a CIBIL score of 700 or above, and your total EMIs stay within about 50% of income.
| Criteria | Salaried | Self-Employed |
| Age | 21–60 years | 21–65 years |
| Minimum income | ₹15,000–₹25,000/month (varies by lender and city) | Stable ITR-declared income; often ₹3–5 lakh p.a.+ |
| Work/business vintage | 1–2 years total; 6 months+ with current employer | 2–3 years in business |
| CIBIL score | 700+ to qualify; 750+ for the lowest rates | 700+ to qualify; 750+ for the lowest rates |
| FOIR | Usually 40–60% of net income | Usually 40–60% of net income |
Criteria vary by lender; these ranges reflect common bank and NBFC policies.
Also Read: Why Was My Personal Loan Rejected Even with a Good CIBIL Score?
What CIBIL Score Do You Need for a Personal Loan for Car?
A 750+ CIBIL score typically gets you sub-12% offers from large banks. Between 700 and 749 you’ll still qualify, usually at 12–16%. Below 700, expect NBFC offers at 16%+ or a request for a co-applicant.
Also Read: How to Improve Your Low CIBIL Score From 500 to 750
Documents Required for a Personal Loan for Car Purchase
You need PAN, Aadhaar, 3 months’ salary slips and 6 months’ bank statements if salaried. Self-employed applicants add 2 years’ ITR and business proof. No car documents are needed for a personal loan for car purchase.
Salaried applicants
- PAN card and Aadhaar card (KYC)
- Last 3 months’ salary slips
- Last 6 months’ bank statements (salary account)
- Form 16 or employment ID, if asked
Self-employed applicants
- PAN card and Aadhaar card
- Last 2 years’ ITR with computation of income
- Last 6–12 months’ bank statements
- Business proof: GST registration, Udyam certificate or shop licence
Compare that with a used car loan, which also needs the RC copy, insurance, a valuation report and the seller’s documents.
Also Read: Personal Loan for Salaried Employees: Apply Now with Documents Checklist by Employer Type
Money in Minutes
- Cash from ₹5000–5 Lakh*
- Instant approval
- Rates from 10.49% p.a.*
No hidden charges • Trusted by 1M+ borrowers across 4,000+ cities
*Interest rate subject to eligibility & credit profile. T&C apply.
How to Apply for a Personal Loan for Car Online
Share your basic details on Ruloans Personal Loan, compare matched offers from 275+ banks and NBFCs, pick the lowest-cost one, complete KYC with that lender, e-sign after reading the KFS, and receive funds in your bank account, often within 24–72 hours.
- Check your eligibility. Enter your income, employer, city and the amount you need for your personal loan for car.
- Get matched. Ruloans shortlists banks and NBFCs from its 275+ partners whose criteria fit your profile.
- Compare offers. Look at the interest rate, processing fee, tenure and APR side by side.
- Complete KYC. Upload PAN, Aadhaar, salary slips or ITR, and bank statements to the chosen lender.
- Review and e-sign. Read the Key Facts Statement, check foreclosure terms, then sign digitally.
- Receive funds. The partner lender disburses to your bank account; you pay the dealer or seller directly.
The partner bank or NBFC sanctions and disburses the loan. Ruloans supports you from application to disbursement, so you’re never chasing paperwork on your own.
Check your personal loan eligibility today: Compare offers from 275+ banks and NBFCs on Ruloans
Also Read: Best Instant Personal Loans in India 2026: Interest Rates Compared
Hidden Costs of a Personal Loan for Car
Beyond interest, budget for a processing fee of about 0.5%–4% plus 18% GST, possible foreclosure charges on fixed-rate loans, and late-payment penalties. On a ₹5 lakh loan, a 2% fee alone is ₹10,000 plus ₹1,800 GST.
- Processing fee: Banks often charge 0.5%–2.5%; some NBFCs go up to ~4%.
- Foreclosure/part-prepayment fee: Common on fixed-rate personal loans (often 2%–5% of the outstanding amount). Floating-rate loans to individuals can’t carry this fee for loans sanctioned on or after 1 January 2026.
- Insurance add-ons: Credit-life cover is optional; you can decline it.
- Car-side costs: Registration, RTO transfer for used cars, and comprehensive insurance aren’t covered by the lender unless you borrow extra.
Always read the Key Facts Statement (KFS). It shows the Annual Percentage Rate (APR), which includes fees, so you can compare offers fairly.
Also Read: Is prepaying your Personal loan a good idea?
5 Mistakes to Avoid With a Personal Loan for Car
Don’t skip comparing offers, don’t stretch the tenure on an old car, don’t ignore the APR, don’t apply to many lenders at once, and don’t borrow more than the car plus transfer costs.
- Taking the first offer. A 2% rate gap on ₹5 lakh over 5 years is roughly ₹30,000 in extra interest.
- Matching a long tenure to an old car. A 5-year loan on a 9-year-old car means paying EMIs on a vehicle that may need major repairs.
- Looking only at the interest rate. A low rate with a 4% processing fee can cost more than a slightly higher rate with a 1% fee.
- Multiple applications in a week. Each hard enquiry can dent your CIBIL score; compare through one platform instead.
- Forgetting the paperwork for a used car. Verify the RC, insurance, challans and any existing loan on the car before paying the seller.
Also Read: Beware of these 4 mistakes while taking a Used Car Loan
How to Get the Lowest Rate on a Personal Loan for Car
- Raise your CIBIL score above 750 and keep credit-card usage under 30% of the limit.
- Check pre-approved offers from your salary-account bank first.
- Borrow only what you need; a smaller car down payment loan keeps total EMIs low.
- Choose the shortest tenure you can comfortably afford to cut total interest.
- Negotiate the processing fee and check foreclosure charges before signing.
- Apply around festive offers, but compare the final APR, not the headline rate.
Also Read: How do you Ensure Low Interest Rates for a Personal Loan
Money in Minutes
- Cash from ₹5000–5 Lakh*
- Instant approval
- Rates from 10.49% p.a.*
No hidden charges • Trusted by 1M+ borrowers across 4,000+ cities
*Interest rate subject to eligibility & credit profile. T&C apply.
Pros and Cons of a Personal Loan for Car
The main benefits are 100% funding, no collateral, fast disbursal and a lien-free car. The main drawbacks are a higher interest rate, a shorter tenure (higher EMI) and a lower maximum amount than a car loan.
| Pros | Cons |
| No hypothecation; RC is fully in your name | Rate 2–5 percentage points higher than a car loan |
| Works for any car age and any seller | Tenure capped at about 5 years, so EMIs are higher |
| Funds in 24–48 hours; useful for quick private deals | Processing fee can reach 2%–3% + GST |
| Can cover down payment, insurance, RTO and accessories | Adds to unsecured debt on your credit report |
| No NOC or lien removal after closure | Over-borrowing risk if you stretch beyond your budget |
Conclusion
A personal loan for car gives you the freedom to buy the car you want, new or used, from a dealer or a private seller, with full ownership from day one. It’s flexible enough to cover the entire price, just the down payment, or extras like insurance and registration. The key is getting the right rate for your profile.
Ruloans is a financial distribution company working with 275+ banks and NBFCs. With Ruloans, you compare offers in one place, choose the lender with the lowest interest rate for you, and get complete support from application to disbursement.
Check your personal loan eligibility today. Apply for a personal loan for car on Ruloans and drive home your car sooner.
FAQ
Can I sell my car before I finish repaying a personal loan for car?
Yes. A personal loan for car doesn’t put a lien on your RC, so you can sell the car anytime without a bank NOC. The loan continues as a normal personal loan, and you keep paying EMIs as scheduled. You can also use the sale money to prepay it.
Can I buy a car in my spouse’s or parent’s name with my personal loan?
Yes. The personal loan is in your name, but the car can be registered in a family member’s name because the lender has no claim on the vehicle. This is useful if your spouse or parent wants to own the car while you handle the EMIs.
Can I use a personal loan to buy an electric car?
Yes. A personal loan for car purchase works for petrol, diesel, CNG, hybrid and electric cars. It also covers costs that an EV loan may not, such as a home charger installation. That makes it a good option for used EVs, which few lenders finance.
Can a first-time borrower with no credit history get a personal loan for car?
Yes. Many banks and NBFCs lend to new-to-credit applicants with a stable salary, a good employer and regular bank statements. You may start with a smaller amount or a slightly higher rate. Paying every EMI on time builds a strong CIBIL score for future loans.
Can I get a personal loan for car if I already have a home loan or other EMIs?
Yes, as long as your total EMIs, including the new one, stay within your lender’s FOIR limit, usually 40–60% of net income. A home loan often strengthens your profile because it shows a disciplined repayment history. Comparing lenders helps you find one with a higher FOIR allowance.
Can I take a personal loan for car without salary slips?
Yes. Self-employed professionals, freelancers and business owners can apply with ITRs, bank statements and business proof instead of salary slips. Lenders mainly want to see steady income credits. A 2-year ITR history and clean banking usually make approval straightforward.
Can I use a personal loan to buy a car from another state?
Yes. Since there’s no lender lien, buying a used car from another state is simpler with a personal loan for used car purchase. Get an NOC from the original RTO. If the car will stay in your state for more than 12 months, re-register it there and pay the local road tax.
Can I replace my existing car loan with a personal loan to remove hypothecation?
Yes. You can use a personal loan to close your car loan, collect the bank’s NOC and submit Form 35 at the RTO to remove hypothecation from the RC. This is worth doing when you plan to sell the car soon or when your personal loan rate is competitive.
Can I take a top-up on my existing personal loan to buy a car?
Yes. Many lenders offer a top-up loan to borrowers with 6–12 months of on-time EMIs. Top-ups usually come with minimal paperwork and quick disbursal, which makes them a fast way to fund a used car or a car down payment.
Can self-employed borrowers claim tax benefits on a personal loan for car?
Yes, if the car is used for business or professional work. Interest on the loan and depreciation on the car can generally be claimed as business expenses for the business-use portion. Keep loan statements and usage records, and confirm the exact claim with your CA.
