Car loans in India generally carry the following features:
One can opt for new or used car loan depending upon the need and the kind of car requirement. Though, most people prefer a car loan over new cars and not the second-hand ones.
Car loan option in India, for a majority, is an alternative that lets them purchase a car which is better than the one available in their budget since the car loan approval is quick.
Car loans in India generally provide a fixed rate of interest option while repayment through EMIs. This keeps you assured of a fixed repayable amount on a monthly basis towards the car loan, facilitating better budget planning without disturbing your usual expenses.
A bank offering car loan mostly also provide flexible repayment tenure options of 1-7 years to repay the car loan amount in regular EMIs.
Car loans in India are often easier to avail when compared to any other loans and involves easy documentation with clear instructions and guidance throughout the full car loan approval and sanction process.
Car loan borrowers can avail loans up to Rs. 1.5 cores, mostly comprising of 100% of the vehicle’s on-road price.
Most banks have reasonable EMIs within flexible tenure options to offer on Car loans.
Car Loan for a Used Car or a New One
Car loans are available for not just buying brand new cars but also used ones. On the face of it, a used car is cheaper so clearly, the car loan amount required will be lower, and so will be the car loan EMIs. But in most cases, a used car requires a higher upkeep cost and there might be additional re-registration costs associated with it, neither of which will be covered by the car loan. So, for a large majority of the prospective car purchasers, approaching a bank or NBFC for new car loan options is preferred over used car loan options. Another factor is that the car loan approval is much swifter for a new car.
But buying a pre-owned car is not that bad of an option either. We list down a few reasons why buying a pre-used car via a car loan is a good deal too:
First and foremost, it is immensely pocket friendly. It is obvious that a second-hand car will cost less, thereafter, the pre-owned car loan financing it will also be a lesser amount compared to its new-car alternative, meaning smaller monthly instalments to pay.
It is evident that the demand for second hand car loans is lesser that that for a new car loan. This is a reason that most banks feature used car finance as an important component in their products, thus, these products are customized and added with extra benefits to appear as customer friendly as possible. Therefore, a car loan gives lots of features and rebates but less of the hassle associated with buying a new car loan.
And the best part, in case of a pre-owned car, the choice of models isn’t dependent on its current on-road price. The amount you invest in a new car of a particular model can buy you a higher model in the same amount or probably even lesser in case of a second-hand car of the same make. Plus, the insurance cost of a pre-owned car is lesser and the prospect of depreciation is considerably less when compared to new cars. So, you can retain its original value when you intend to resell it in the future.
Interest Rate for Car Loan Starts from 9.05%
Note: Car loan interest rates. Car loan rates in the table are subject to the credit/ risk profile as assessed by the lender on the basis of parameters such as credit scores, age and repayment capacity of the applicant. Housing loan interest rates in the table are subject to change anytime without prior notice.
Car Loan Eligibility Criteria:
Car loan eligibility differs across lending institutions and loan schemes. However, a common set of housing loan eligibility criteria is given below:
Almost anybody who fulfils the basic car loan eligibility criteria can apply for a car loan in India. The basic requirements to take up any loan are driven by the age, employment status and other demographical factors of the car loan subscriber along with of course, their repayment capacity. The common requirements, irrespective of the financial institution or loan amount, for an individual to be eligible for a car loan approval include:
The borrower should be salaried, self-employed, business owner or a professional
They should be of Indian nationality residing in or outside India
They should be at least 21 years old and not more than 65 years old
Should meet the minimum repayment capacity or minimum salary requirements
They must be in the current job for one year (salaried) or two years in the same business (self-employed or professional)
Several documents that establish necessary information like your identity, proof of income and residence are required for a car loan application. But out of all, the documents relating to new or old car, are the most important. The complete set of relevant car loan documents makes one eligible for loan and one cannot do without submitting the right docs. Though, the documentation requirements vary from lender to lender, following is a list of commonly asked for documents required while applying for a car loan :
Income proof documents for Self-employed persons:
Duly signed and filled application form available either on the website or physically at the bank’s outlets
Passport Size Photographs, generally 4-6 photos
An identity proof which can be one of these documents- Passport, Pan Card, Driving License, Voters ID card, Aadhaar card or employee identity card in case of government employees
Address Proof like Bank statement, Rent Agreement, Voters ID card, Ration card, Passport, Driving License, Telephone bill, Electricity or water Bills, Credit card bill or Property tax document
Age Proof which may be a Voter ID card, Secondary school leaving certificate (class 10), Birth certificate, Passport, Aadhaar card, Pension payment order or Receipt of LIC policy.
Income proof documents in case of salaried individuals:
Latest 3 months’ salary slips
Form 16 with proper computation of income
Salary account bank statement for six months
Latest acknowledged IT return
Business stability and ownership proof
Last two years’ computation of income
Profit and Loss statement
Balance sheet certified by a C.A.
Latest six months’ bank statement
Last two years’ sales
Copies of acknowledged IT returns
PAN Card for the lender to check and verify if you are trustworthy enough to make regular repayments by your credit records history.
Documents providing Vehicle information which may include the sales receipts from the seller.
In order to establish that, all applicable laws and protocols are followed with regards to the purchased vehicle, the applicant must also submit copies of the Vehicle’s Motor Insurance and your Driving License.
Car Loan Interest Rates:
Though like most debt instruments, car loan interest rates are linked to the base rate dictated by RBI directives, the rate does differ slightly from bank to bank. Additional factors that may affect the interest rate on car loans include the loan amount, loan tenure, your credit history and your reputation with the bank. Currently car loans are available on interest rates ranging from 10% – 15% but there are a few banks that offer it for as low as 9.55%.
Car Loan Fees & Charges
The fees and charges of Car loans usually vary from lender to lender and case to case. Some of the common fees and charges related to Car loans are as follows:
Loan Processing Fees
Pre-payment/part-payment or Foreclosure charges
Documentation Fees & Stamp Duty
Documents Required to Apply for a Car Loan.
Proof of Identity & Age: Copy of any one (PAN Card, Passport, Aadhaar Card, Voter’s ID Card, and Driving License)
Proof of Residence: Copy of anyone (Bank Passbook, Voter’s ID, Ration Card. Passport, Utility Bills (Telephone Bill, Electricity Bill, Water Bill, Gas Bill) and LIC Policy Receipt
Note: The above list is indicative and your lender might ask for additional documents.
Step 1– Share Your Details
Enter Car information as well as the details related to your loan requirements.
Step 2– Submit the Application
Apply for the Car loan offer that suits your loan requirements the best.
Once your application is successfully submitted, you will get a confirmation of your Car loan application. Next, our loan expert will call you within few hours.