Car loans look similar on the surface regardless of whether the car is new or used, but the terms you'll actually be offered can differ substantially.
Interest rates run higher for used cars
Used car loans typically carry a rate 1-3% higher than new car loans, since the vehicle depreciates faster and its resale value is harder for the lender to assess precisely as collateral. Tenure is also usually shorter for used cars — often capped around 5 years versus up to 7-8 years for new vehicles.
Loan-to-Value ratio differs too
Lenders typically finance 80-90% of a new car's on-road price, but often only 60-80% of a used car's assessed value — meaning you'll need a larger down payment proportionally for a used car purchase.
A shorter tenure usually beats a longer one here
Because cars depreciate quickly — often losing 15-20% of value in the first year alone — you don't want to end up "upside down" on a loan, owing more than the car is worth. A shorter tenure means a higher EMI but far less total interest, and gets you to positive equity in the vehicle faster.
Should you lease instead of buying on loan?
For some situations — especially shorter ownership periods or wanting to avoid resale hassle entirely — leasing can make more sense than financing a purchase, even if the pure numbers look similar on the surface.