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v3cars
Delhi

Car Loan in India

V3cars makes applying for a car loan online quick and simple. All you need to do is furnish some details on the website and submit your application. Once this is done, the bank automatically takes over and you have your loan quotes ready.

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Looking for a Car Loan in India?

Several banks, non-banking financial companies (NBFCs), and other financial institutions offer assistance to apply for a car loan in India. Follow these steps:

  • Check Your Credit Score: Ensure eligibility by verifying your credit score before applying for a car loan. A higher credit score can secure a lower interest rate and more favourable loan terms.
  • Determine Your Budget: Choose your desired car and establish a budget. This step assists in deciding the loan amount and repayment tenure that align with your financial capabilities.
  • Compare Lenders: Research and compare interest rates, loan terms, processing fees, prepayment charges, and other fees across various lenders. This analysis aids in selecting the lender offering the most favourable terms for your requirements.
  • Gather Documents: Collect necessary documents, including identity proof, address proof, income proof, and relevant car-related paperwork, as required by the lender.
  • Apply for the Loan: Submit your application online or by visiting the lender's branch. Provide the necessary documents and await loan approval.
  • Repay the Loan: Once approved, adhere to the repayment schedule by making regular Equated Monthly Installments (EMIs) over the loan tenure.

Remember to read the loan agreement carefully and comprehend the terms and conditions before finalizing your car loan in India.

What is a Car Loan?

Banks, non-banking financial companies (NBFCs), and other financial institutions in India extend car loans to individuals for financing the purchase of a car, whether new or used, for personal or commercial purposes.

Lenders determine the car loan amount, interest rate, repayment tenure, and other conditions based on factors such as the borrower's credit score, income, loan amount, and tenure. Eligibility criteria, encompassing age, income, employment status, and credit score, must be met by applicants. Additionally, borrowers are required to furnish documents like identity proof, address proof, income proof, and relevant car-related paperwork.

Repayment of these car loans typically occurs through Equated Monthly Installments (EMIs) throughout the loan tenure. EMIs comprise both the principal amount and the interest charged by the lender. Lenders may also impose processing fees, prepayment charges, and other fees that contribute to the overall borrowing cost.

Before securing a car loan, it is crucial to compare terms from different lenders, meticulously read and comprehend the loan agreement, and gain a clear understanding of the stipulated terms and conditions. Moreover, ensuring that the EMI aligns with one's budget and repayment capacity is essential before committing to a car loan.

What is Car Loan Eligibility in India?

Several factors contribute to determining car loan eligibility in India, with financial institutions considering various aspects of the applicant's profile. Key factors include:

  • Income: Most lenders set a minimum monthly income requirement, typically ranging from Rs. 15,000 to Rs. 20,000. The specific income criteria may vary based on the lender and the car's price.
  • Employment Status: Lenders prefer applicants with stable employment or a consistent income source. Self-employed individuals might need to furnish additional documentation to showcase income stability.
  • Credit Score: A crucial determinant, a credit score of 750 or above is generally considered good and enhances the likelihood of loan approval. A lower credit score may result in a higher interest rate or potential rejection.
  • Age: Applicants within the age bracket of 21 to 60 years are typically eligible for a car loan.
  • Financial Obligations: Lenders assess existing financial commitments, such as ongoing loans or credit card debts, as they can impact the applicant's capacity to repay the car loan.

Additionally, lenders may consider factors like the loan amount, down payment, and the car's price when evaluating car loan eligibility. It is advisable to check with the specific lender or refer to their website for detailed information on eligibility criteria and requirements tailored to their offerings.

List of Required Documents for Car Loans in India

The documents needed for a car loan application in India can vary depending on the lender and the specific loan type. However, the following are commonly requested documents:

  1. Identity Proof: Any government-issued ID proof, such as an Aadhaar card, passport, voter ID card, driver's license, or PAN card, is acceptable.
  2. Address Proof: Government-approved address proof, like an Aadhaar card, passport, voter ID card, utility bills, or a rent agreement, is typically required.
  3. Income Proof:
    • For Salaried Individuals: Latest salary slips and bank statements for the preceding 3 to 6 months are generally needed.
    • For Self-employed Individuals: Income tax returns, balance sheets, and profit and loss statements for the past 2-3 years may be necessary.
  4. Employment Proof:
    • Salaried Individuals: A certificate of employment from the employer can be submitted.
    • Self-employed Individuals: Business establishment proof such as a trade license or GST registration certificate may be required.
  5. Bank Statements: The latest bank statements reflecting the applicant's income, expenses, and financial stability are often requested.
  6. Photographs: Recent passport-sized photographs of the applicant are typically needed.
  7. Vehicle-related Documents:
    • For New Cars: The invoice or proforma invoice for the car is required.
    • For Used Cars: Registration certificate and insurance papers of the vehicle are necessary.

These documents serve as a general guide, and applicants are advised to check with their specific lender for precise requirements and guidelines applicable to their car loan application.

FAQs on New Car Loan

Get answers to the frequently asked questions about new car loan here

Ans: It is possible to get 100% funding to buy a car in India, but it depends on several factors, including your credit score, income, and the policies of the lender. Most lenders in India do not provide 100% funding for car loans, but some may offer up to 90% of the car's on-road price as the loan amount.

If you have a good credit score and a stable income, you may be eligible for a higher loan amount, which can cover the entire cost of the car. However, lenders may charge a higher interest rate for such loans, and the repayment period may also be shorter.

Additionally, some lenders may require you to pay a certain percentage of the car's cost as a down payment, and the loan amount may cover only the remaining amount. This is because the lenders want to ensure that the borrower has some financial commitment towards the purchase of the car and can repay the loan on time.

It's important to check with the lender or visit their website to understand their specific policies and requirements for car loans. Also, keep in mind that borrowing the entire cost of the car as a loan can lead to a higher interest burden and may not be financially feasible in the long run. It's best to evaluate your financial situation and choose a loan amount that you can comfortably repay over the loan tenure.

Ans: Yes, you can prepay the entire car loan amount in India. Prepayment is the process of paying off a loan before its due date, which can help you save on the interest amount and close the loan account earlier than expected.

Most lenders in India allow prepayment of car loans, and there are usually no prepayment penalties or charges for prepaying the entire loan amount. However, it's essential to check with your lender and read the loan agreement's terms and conditions to understand the prepayment policies and charges, if any.

Some lenders may charge a prepayment penalty if the loan is prepaid before a certain period or have certain conditions related to prepayment, such as a minimum loan tenure. It's important to understand these policies and charges before opting for prepayment to avoid any surprises.

Once you decide to prepay the car loan, you can contact your lender and inform them about your intention to prepay the loan. You may be required to submit a written request and a cheque or demand draft for the outstanding loan amount. Once the lender confirms the receipt of the prepayment amount, they will update your loan account and issue a no-dues certificate, indicating that the loan has been fully repaid.

In summary, prepayment of a car loan in India is possible, and it can help you save on interest costs and close the loan account earlier. However, it's important to check with the lender for their prepayment policies and charges before opting for it.

Ans: Most lenders in India offer car loans for financing a wide range of car models, including hatchbacks, sedans, SUVs, MUVs, and luxury cars. The car models that are eligible for standard car loans in India may vary depending on the lender and their policies.

Ans: Whether you need a guarantor or security when applying for a car loan in India depends on various factors such as your income, credit score, and the lender's policies. In general, a guarantor or collateral may be required if the lender considers you a high-risk borrower or if the loan amount is significant.

Some lenders may require a guarantor, who is a person who agrees to repay the loan in case you default on the payments. The guarantor should have a good credit score and income to support the loan repayment. However, not all lenders require a guarantor, and it depends on their assessment of your creditworthiness.

Similarly, some lenders may require collateral or security for the car loan, which could be in the form of a property or asset. This helps the lender mitigate their risk in case of default by the borrower. However, most car loans in India are unsecured, meaning they do not require any collateral.

In general, the lender evaluates various factors such as your income, employment stability, credit score, and repayment history to assess your creditworthiness and decide whether a guarantor or collateral is required. It's important to check with the lender or visit their website to understand their specific requirements and policies for car loans.

In summary, whether you need a guarantor or security when applying for a car loan in India depends on various factors, and not all lenders require them.

Ans: Car loans in India typically come with a repayment tenure ranging from 1 year to 7 years, although the specific repayment tenure may vary depending on the lender and their policies. The most common car loan repayment tenures available in India are:

1 year to 3 years: This is a short-term repayment tenure and is suitable for borrowers who can afford higher EMI payments and want to pay off the loan quickly.

3 years to 5 years: This is the most common repayment tenure for car loans in India and is suitable for most borrowers who want to balance their EMI payments with the loan tenure.

5 years to 7 years: This is a long-term repayment tenure and is suitable for borrowers who want lower EMI payments but are willing to pay more interest over the loan's tenure.

It's important to note that the repayment tenure affects the EMI payments and the total interest paid on the loan. A longer repayment tenure may result in lower EMI payments but a higher interest cost over the loan's tenure, while a shorter repayment tenure may result in higher EMI payments but lower interest costs.

Before choosing a repayment tenure, it's essential to evaluate your financial situation, income stability, and future expenses to decide on an appropriate tenure that suits your needs and budget. It's also important to check with the lender for their specific repayment tenure options and policies.

Ans: Your credit score plays a crucial role when it comes to buying a car, as it indicates your creditworthiness and ability to repay the loan. In India, most lenders require a minimum credit score of 700 to 750 to qualify for a car loan, although the specific credit score requirements may vary depending on the lender and their policies.

Ans: Yes, your credit score can significantly affect the interest rate you are offered when applying for a car loan in India. The interest rate is the cost of borrowing money from the lender and is expressed as a percentage of the loan amount. A higher credit score indicates good creditworthiness and a lower risk of default, which can result in a lower interest rate, while a lower credit score indicates poor creditworthiness and a higher risk of default, which can result in a higher interest rate.

Ans: Whether to take a car loan from a car dealership or a bank depends on various factors, such as the interest rate, loan amount, repayment tenure, processing fees, and other loan terms. Here are some points to consider when deciding between a car dealership loan and a bank loan:

Interest rate: Typically, car dealerships offer higher interest rates than banks. Therefore, it's important to compare the interest rates offered by the dealership and the bank to determine which one is more favorable.

Loan amount: Car dealerships may offer financing only for the purchase of the car, while banks may offer higher loan amounts that can also cover the registration charges, insurance premiums, and other related expenses.

Repayment tenure: Banks generally offer more flexible repayment tenures ranging from 1 to 7 years, while car dealerships may offer shorter repayment tenures.

Processing fees: Car dealerships may charge higher processing fees than banks, which can increase the total cost of borrowing.

Loan terms: Banks may offer more favorable loan terms, such as pre-payment options, foreclosure options, and other benefits.

In general, it's advisable to shop around and compare the loan terms offered by different lenders, including car dealerships and banks, before making a decision. This can help you find a loan with the most favorable terms that meets your needs and budget. It's also important to read the loan agreement carefully and understand the terms and conditions before signing the loan agreement.

Ans: The EMI (Equated Monthly Installment) for a car loan of Rs. 10 lakhs in India depends on various factors such as the interest rate, loan tenure, and processing fees. Assuming an interest rate of 9.5% per annum and a loan tenure of 5 years, the EMI for a Rs. 10 lakh car loan would be approximately Rs. 21,204. However, this is only an estimate, and the actual EMI may vary depending on the specific loan terms offered by the lender. It's important to check the loan agreement and Calculate the EMI based on the interest rate, loan tenure, and loan amount to determine the actual amount you will have to pay every month towards the loan repayment. It's also important to ensure that the EMI is affordable and fits within your budget before taking a car loan.

Ans: The current car loan interest rate in India varies from lender to lender and depends on various factors such as the loan amount, loan tenure, borrower's creditworthiness, and the prevailing market conditions. As of February 2023, the car loan interest rates offered by major banks and financial institutions in India range from around 7.15% to 12.5% per annum.

However, it's important to note that the interest rate offered to an individual borrower may differ based on their credit score, income, loan amount, and other factors. Additionally, some lenders may charge processing fees, prepayment charges, foreclosure charges, and other fees that can increase the total cost of borrowing.

It's advisable to compare the car loan interest rates offered by different lenders, read the loan agreement carefully, and understand the loan terms and conditions before signing the agreement. It's also important to ensure that the loan EMI (Equated Monthly Installment) fits within your budget and repayment capability before taking a car loan.