Car Loan Documentation

Banks in India offer car loans with interest rates starting from as low as 7.25% per annum. The loan tenure offered by a majority of the Banks ranges from 1 to 8 years. The processing fees charged for the application process depend upon the Bank you apply to. A certain amount of the Car price is required to be paid by the borrower of the Loan in the form of a down payment. Few banks and financial institutions also pay the price for the Car for the borrowers fully.

Many car dealerships also provide their customers with the option to apply for a Car Loan with the help of some tie-ups with a few specific banks and financial institutions. The rate of interest offered in this case is usually higher than that which you can avail yourself of. Most Car Loans can even finance the 100% on-road price of the Car. This would have no down payment from the borrower. Certain Banks provide Car loans up to few Crores to their customers. These Loans are not specifically limited to the purchase of a new car. These can be used to pay for an Old Car as well. A high credit score can get you a lesser interest rate for your loan.

Some popular Car Loan schemes offered by India Banks and Financial institutions are -

• Bank of Baroda Car Loan
• Canara Bank Car Loan 
• Axis Bank Car Loan 
• Federal Bank Car Loan
• The State Bank of India Car Loan
• ICICI Bank Car Loan

Eligibility Criteria -

The application criteria involved for the application procedures of Car Loans are :

• The applicant should be of legal age at the time of application and below the age of 75.
• The applicant should have a net monthly income of at least INR 20,000.
• The applicant should be self-employed or salaried/employed for at least the past year from the current employer. 
• The applicant should be working for a private or government organization or self-employed.

Documents Required -

The Documents required for the application procedure of Car Loans include the following with Passport-sized photographs :

• Proof of Identity of the Applicant (Any of these: Aadhaar Card, PAN Card, Passport, Driver’s Licence, Voter ID Card of the applicant).
• Proof of Residence of the Applicant (Any of these: Aadhaar Card, Passport, Driver’s License, Utility Bills, Ration Card).
• Proof of Income ( Form 16, Salary Slips from the current employer, Bank statements of the past six organisations months, Latest Income Tax returns report).

In some cases, the Banks and financial institutions might demand certain extra documents and paperwork as per the Bank’s policies.

It is easier to avail of a Car Loan when compared with other loan options available in India. A high credit score is not required for the application process as this Loan is kind of a Secured Loan. The vehicle itself acts as a security of the Loan and can be beneficial for both the lending bank and the borrower. But, Car ownership is not provided to the borrower until the end of the Tenure of the Loan. You would also be required to pay a down payment to the car selling agency.

The key factors that can help you in estimating the monthly EMI amount include the loan amount to be borrowed, the processing fees charged, the rate of interest applicable, and the tenure of the loan. A Car Loan EMI Calculator can be used online to determine the monthly repayment with the help of the details mentioned earlier.

Consider and compare several Car Loan offers from various Banks and financial institutions and apply to the ones you are eligible for. Choose a Car that requires fewer services as it would significantly reduce your future monthly expenses. Do not apply for a Car Loan in multiple Banks as it would impact your Credit Score.

Also read this: What is the tenure period of a car loan?