Second Hand Vehicle Loan Scheme


In the modern era there is a heavy demand for purchase of second hand vehicles and the banks have surplus loan-able funds to diversify the loan portfolio and to provide financial assistance to the borrowers for purchase of second hand vehicle, this scheme has been diversified.

A.Short title, extent and commencement:-

  1. This scheme may be called ‘Second Hand Vehicle Loan Scheme’ to individual sole proprietor professional and partnership concern residing in the area of operation of the lending bank by the State and Central Banks as the case may be.
  2. The scheme shall be implemented through the branches of the State and Central Coop. Banks in UT and in the State of Punjab.
  3. It shall come into force from the date of approval by the Registrar Coop.Societies Punjab Chandigarh.
  4. The vehicle to be purchased by the loanee should not be more than 3 years old, should be accident free, one time road tax paid, bearing Registration Number of U.T. Chandigarh or the State of Punjab.


            In this Scheme unless the context otherwise requires :

  1. Act’ means, the Punjab Cooperative Societies Act 1961 as amended from time to time.
  2. ‘Bye-laws’ means the registered byelaws of the State / Central Cooperative Banks concerned.
  3. ‘Bank’ means State/Central Cooperative Bank registered under the Act.
  4. ‘Committee’ means the Governing body of the Cooperative Bank by whatever name called to which the management of the affairs of the bank is entrusted.
  5. ‘Government’ means Government of Punjab.
  6. ‘Nominal Member’ means a person admitted to membership of he bank under Act. Rules and Bye-laws.
  7. ‘Officers’ means the President, Vice President, Chairman, Vice Chairman, Managing Director, Manager, Liquidator and Administrator includes any other person empowered under the rules or the bye laws to give direction in regard to the business of the bank.
  8. ‘Registrar’ means a person appointed to perform the function of the Registrar of Cooperative Societies under the Act.
  9. ‘Rules’ means the Punjab Cooperative Societies Rule 1963.

C. Purpose

            Loan shall be advanced for the purchase of second hand vehicle such as car, jeep, sumo, qualis, etc. for personal/public use.

D. Eligibility

            An individual, sole proprietor, professional and partnership concern residing in the area of operation having permanent account number provided by the Income Tax authority in urban areas and in case of rural area having at least 5 acres of agriculture land and should not be defaulter. The applicant will be enrolled as nominal member of the bank under the Act, Rules and Bye-laws.

E.Quantum of Loan:

            The quantum of loan shall depend upon the model and present value of the vehicle. Present value shall be the value as provided by Sah & Sanghi in the current price Index and also available on Website & Sanghi priceindex.asp or the value approved by the registered surveyor of any GIC with the condition that the insurer has to get insurance cover from the concerned Insurance Company on whose list the name of the surveyor appears, which is lowest shall be the quantum of loan. The maximum loan amount shall be Rs.5 lacs or 75% of the assessed price of the vehicle whichever is less.

F. Interest:

The Interest rate shall be charged as decided by the bank from time to time with quarterly rests. In case of defaults a penal interest @ 2% p.a. over and above the normal rate on the default amount for default period shall also be charged.

G.Period of Loan/Repayment of Loan

            Maximum period of loan shall be five years. Repayment of the loan shall, be in monthly equated installment. In case of urban borrowers and half yearly equated in case of rural borrowers due on 30th June and 31st December. Moratorium period of one month shall be allowed under the scheme.


            The security for  the loan is 1st Hypothecation of the Vehicle in the name of the bank entered in RC of the vehicle. Two good sureties residing in area of operation of the bank and having a PAN Card in case of urban areas and two sureties of the status of borrower in case of rural area. The sureties shall be enrolled as nominal member of the bank under the Act.
            A collateral security to the extent of 100% of loan in the shape of assignment of life insurance policy, pledge of NSCs, KVPs, Term Deposits of own bank, in case the borrower is not willing to give sureties.

I.Disbursal of Loan

            The loan will be disbursed after the appraisal of all legal documentation completed and borrower having deposited his share of margin in the SB account. The disbursement will be third party payment by way of banker cheque/Demand Draft in the name of the seller (owner of the vehicle) delivered through and under receipt from borrower.

J.Fee and Other Charges

A processing fee of 0.25% of the loan amount sanctioned shall be charged.


  1. Identity proof
  2. Residential proof
  3. Two self attested recent passport size photographs of the applicant and sureties each
  4. Photocopy of the PAN
  5. Copy of Income Tax Return for last three years duly acknowledged by ITO
  6. Photocopy of the Driving License
  7. A photocopy of the RC of the Vehicle and case of rural people copy of Fard, Jamabandi.
  • Loan application form
  • Loan agreement
  • DP Note
  • Hypothecation deed/Collateral Security/Agreement Bond from Sureties.
  • Agreement of Sale.
  • Certificate of present value of car assessed by Surveyor of company guide or as determined on the basis of guidelines of the Punjab Govt. on the Subject.
  • L.Insurance

    Comprehensive insurance in the joint names of the borrower and the bank shall be made at the cost of the borrower. In case of default bank will be at liberty to get a policy renewed by debiting to loan account of the borrower.