Blog #car loan EMI calculator

Nowadays, Cars are no longer a symbol of luxury but they have become a symbol of necessity. Many Indians do not just desire a Car but need it. This is why many banks and financial institutions offer Loan schemes for people wanting to buy a Car.

Car Loans have a rate of interest starting from 7.25% per annum in India. The processing fees for the Loan process depend upon the Bank you apply to. The Loan tenure for Car Loans generally ranges from 1 to 8 years. The applicant for a Car Loan should be below 75 years and above 18 years of age. The applicant should be a resident of India and have a net monthly income of INR 20,000. Banks demand few documents for verification before the sanction of a Car Loan.

There are many car loans available in India. The most popular ones include:

1. Bank of Baroda Car Loan
2. ICICI Bank Car Loan
3. HDFC Car Loan
4. Bank of India Car Loan
5. Kotak Mahindra Bank Car Loan
   
   

Car insurance is a very important aspect while purchasing a Car. The insurance policies opted by the borrower can help him/her cover certain damages that might happen in the future.

Given below are few advantages that Car insurance provides to the owner of the Car:

• According to certain Laws of India, Car insurance is mandatory for every car owner. This was first introduced by the vehicle act of 1988. If a person driving in India is caught without Car insurance by the concerned authority members, he/she would be obliged to pay the penalty for the same. You should always carry the car insurance policy papers along with you while driving your car.
  
  
• If by any chance, you are involved in a car accident where another vehicle, a pedestrian, or some else’s property is involved, the insurance provider would have to pay for your Healthcare bills and/or for the repair for the damage that has been caused to your Car. This can help you a lot in reducing your burden of bills in these difficult situations.
  
  
• There are several Car insurance policy options available for your help. One of them is Comprehensive Car insurance. With the help of comprehensive Car insurance, any third-party injuries/damages are covered by the insurance provider. The cost of damages, injuries, and repairs are also covered in case of natural calamities, fire, explosions, acts of terrorism, strikes, or if your car ever gets stolen. This makes the comprehensive loan policies one of the boast popular Car insurance policies in India.
  
  
• Many times, car accident survivors are faced with legal actions and procedures. Many car insurance schemes offer to cover the legal charges involved in these situations. This benefits the car accident survivor in covering all the legal fees required to be paid until the legal proceedings come to an end.
  
  
• Many insurances provide also offer the option of a personal accident cover. If not, the customers also have the option to ally for it as an add-on. If the policyholder by any chance dies during the Car accident, the policyholder’s family members would receive compensation from the insurance company. This can help the family members in ways unimaginable.

These were the reasons why it is advantageous to opt for a car insurance policy in India. 

You can use a Car Loan EMI Calculator available on several online portals to estimate the monthly repayment amount that you need to pay back to the Bank till the end of the loan tenure. The requirements for the use of these calculators include Loan Tenure, Loan amount, processing fees, rate of interest charged, This can help the people interested in Car Loans to budget out their monthly expenses properly.

Some popular car insurance offered by insurance firms in India are:

• Digital Car insurance
• Bajaj Allianz Car insuarance
• Bharti AXA Car insurance
• Kotak Mahindra Car insurance
• Liberty Car insurance
• State Bank of India Car insurance

Also read this: Benefits of availing credit card in this pandemic 

Car loans are of two types: secured car loans and unsecured car loans. A secured car loan is availed with the car as collateral and has a fixed interest rate for the entire loan term, whereas an unsecured car loan doesn’t require collateral and has both variable and fixed interest rates. An unsecured car loan is primarily for a low principal amount. A car loan is hassle-free and convenient to avail. The banks and financial institutes make sure that the loan is adaptable in every way. Before availing a loan, the individual should do enough research and have ample knowledge about banks and their offers.

1) The right lender: A loan is financial help, and practically it can be availed from anyone, starting from your next-door neighbor to everyone that comes along, but availing a loan from someone that doesn’t have a clear print on loan is risky and disadvantageous. That’s why to avail money, legitimate organizations like banks and financial institutes are present. Even among banks and NBFCs. The financier should be trustworthy and have numerous customers as they indicate their level of influence.  

2) Budgeting: You should consider your monthly income and spending level before going for a loan. The car loan still needs monthly payments, and you should make sure that you will be able to pay the interest on time without missing a single payment.

3) Car selection: Before standing in front of a financier, you should select the car you want and the money you can afford for that car.

4) Eligibility criteria: Every bank and NBFC has a certain criterion that the applicant must meet before availing of a car. The age requirement to avail of a car loan is between 18 years and 75 years, though most banks and financial institutes prefer the minimum age to be 21 years. The applicant should have a stable income or profit each month. The applicant should be a salaried individual or self-employed individual, or self-employed non-individual (co-applicants). The applicant must earn a minimum of Rs 3,00,000 per annum to be a borrower of the loan. The applicant should be working for a minimum of 2 years and at least one year with the current employer. The applicant should be able to fulfil all the above before applying.

5) Documentation: To prove that the applicant meets the eligibility criteria, he/she needs to submit documentation alleging those. The required documents are ID proof-PAN card, Aadhar card, Voter Id, driving license, passport (anyone is enough). 

a) Address proof: A government-authorized document verifying the applicant’s place of residence. It could be a PAN card, Aadhar card, Voter ID, driving license, passport (anyone is enough). 

b) Income proof: An official authorized document specifying the applicant’s salary. ITR, form 16, salary slips, or any other valid document mentioning the applicant’s income or profit.

6) Tenure: The loan term you are going to avail of the loan is tenure. Banks and NBFCs provide tenure for anywhere between 12 months and 72 months to avail of a car loan. But it is advisable to choose a shorter tenure as it reduces the interest amount on the whole.

7) Loan amount: Most banks and financial institutions provide loan amounts up to 90% of the car’s ex-showroom value, but few HDFC or SBI car loan provide up to 100% of the car’s ex-showroom price. Economists and financier advisers recommend at least 20% of the car’s value to be a down payment, an amount that isn’t from the loan’s principal.

8) Interest rate: Equated Monthly Installments(EMI) is the applicant’s monthly interest amount instalment to pay each month until the end of tenure. Depending on the loan amount you avail, the interest rate varies. The Car Loan emi Calculator can be used to know the monthly instalment you’ll have to pay for the loan amount you take.

9) Car booking: If all the above suits you well and good, you can go to the dealer, recommend a car quotation, and take it to the lender to avail the money.  

Also read this: Explaining Car Loan 

Each bank and the financial institution offers different schemes for car loans. 

The borrower has to consider several factors while obtaining a car loan -

Deciding the car : 

The first factor to consider while applying for a car loan is to extensively research cars and their models. Costs such as maintenance, insurance, fuel, etc., should also be considered. The borrower should also decide whether they want to purchase a new car or a used car. Finally, the borrower should finalise depending upon a car based on their budget and capacity to repay the loan amount without defaulting.

Credit score :

The borrower should consider their credit score before applying for a car loan. The borrower’s credit score determines their eligibility and the interest rate of the car loan. A minimum credit score of 750 is considered beneficial for the borrower.

Interest rate :

The borrower should consider the interest rate charged by the bank or the financial institution. A low interest rate is advantageous for the borrower. This is because it directly affects the equated monthly instalments to be paid by them; the lower the interest rate, the lower the EMI. Hence, they would save more money with a low interest rate.

Repayment capacity :

The borrower should consider their repayment capacity before availing of a loan. In addition, they should consider their existing debts, if any. Finally, they should use the car loan EMI calculator available on the bank’s website to calculate the EMI they would have to pay on availing of a car loan. Then, the borrowers should calculate different combinations of loan amount and loan tenure to figure out the one that fits their requirements.

Tenure :

Based on their repayment capacity, the borrower should consider the loan tenure, whether short-term or long-term. In a short-term car loan, the monthly instalments are bigger, but the interest rate charged would be less, and they would get rid of the debt faster. In a long-term car loan, the monthly instalments would be smaller, but the interest rate charged would be higher, and it would take more time to get rid of the loan. The borrower should decide on the tenure based on their repayment ability and financial requirement.

Prepayment and foreclosure charges :

The borrower should consider the prepayment and foreclosure charges on the car loan. Prepayment allows the borrower to pay off the loan amount before the tenure end and save up on interest; however, banks charge a fee on prepayment and foreclosure. The penalty rate differs in every bank, so the borrower should decide accordingly.

Loan to ratio value :

The borrower should consider the loan to ratio value on the car loan offered by the lender. Many lenders offer a loan to ratio value of upto 100% on both new cars and used cars. 

Processing fee :

The borrower should consider and compare the processing fee charged by each bank and financial institution. The lower the processing fee, the more the money saved by the borrower. Such information is available on the website of the bank or the financial institution.

Insurance :

It is a wise decision to take insurance cover on the car purchased. However, the borrower should consider doing their research on insurance covers rather than accepting the one offered by the lender because the lender offers a cover from an insurance company with whom they are affiliated, so the borrower may not get the best deal. 

Other factors :

The borrower should also consider other factors such as the service tax, acceleration clause, offers and discounts, etc., on the car loan.

ICICI car loan provides detailed information regarding the loan process, interest rates, processing fees, eligibility criteria, documentation, etc. Any individual can access this information on their website and use it to make the right decision while obtaining a car loan. The borrower has to repay the principal amount in addition to the interest charged upon it during the decided loan amount.
Also read this: What benefits i will get from car loan 

What are the eligibility criteria for a car loan?

Eligibility criteria is a set of framework that determines whether or not you are qualified to apply for a car loan. Before applying for a car loan, every individual has to go through an eligibility criteria check to ensure that they are qualified. 

A lot of banks (like PNB Car loan or ICICI Bank) have eligibility criteria calculators on their website, so if anyone is interested in applying for a car loan at their bank, they can use that calculator to check whether or not they're eligible to do so. 

Factors that affect car loan eligibility

The eligibility criteria usually differ from one bank to another. There are many variables that impact the eligibility criteria of the bank. 

Some of them are:-

1) Credit Score:- This is the essential criteria to check whether or not an individual is eligible for a car loan. A credit score is basically a number between 300-900 that defines a person's creditworthiness. So if your credit score is high, then your application will quickly get approved. But if your credit score is low, then you'll have to go through some variables. 

2) Car:- The type of car you're purchasing also plays an important role in determining whether or not you're eligible for a car loan. Because a vehicle is an asset, so its value will keep depreciating. So the bank checks the model and the model's resale value before approving your loan application. If the resale value is high, you'll be required to qualify for a specific eligibility criterion different from the usual standards. So a car's resale value is an essential factor to determine your eligibility. 

3) Income:- Banks only allow employed individuals to apply for car loans. So if you're unemployed or a fresher, then your application for a car loan will be rejected. Banks check not only your employment status but also your income. The minimum revenue required is INR 10000 per month to apply for a car loan. So if your income is less, then you won't be able to apply for a car with a high value. So if your income is high, then you can easily get approval for a high-value vehicle. Your 60% of the income is taken for EMI. So you can calculate the EMI you'll be paying in advance using tools like Car Loan EMI Calculator. 

4) Employment status:- An individual needs to be employed. They can either be salaried or self-employed individuals. And the minimum work experience required for a salaried individual is 1 or 2 years. And if you are a self-employed individual, then your business should be at least two years. 

5) Relationship with the bank:- Your relationship with your lender is significant. You should maintain a healthy relationship with the bank that already has your account with them. So in times of need, they can help you with the whole car loan process, and you can even negotiate the interest rate and other charges. 

The eligibility criteria usually vary from one bank to another. 

Some of the essential eligibility criteria are: 

1) Age:- You should be at least 18-60 years to be eligible for a car loan. But this usually varies from bank to bank. Some banks only accept individuals who are 21 and above. 

2) Income:- You should at least have an income of INR 10,000 per month. 

3) Employment status:- You can be a self-employed individual or a salaried individual. 

4) Work experience:- You should have a minimum of 2 years of work experience in order to be eligible for a car loan. 

If you can't meet all these criteria, then your loan application will be rejected. But if you're really determined about getting a car through a car loan. Then you can get a co-signer or a guarantor to take the car loan responsibility with you. But be sure to compare all the banks and then choose the one that fits you perfectly.

Also read this: Understanding Car Loan Lender 

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? 

Unemployed individuals can be businessmen or freelancers. This group of people don’t have a constant monthly income debiting to their account but are earning some way or other. Employed individuals are not the only segment of people that are eligible for a car loan. A car loan is like a personal loan in which interest rates are low because there is collateral pledged against the loan in the form of the car that is to be bought. The car itself remains with the buyer and can be used as per their need. The bank on the other hand holds some important document of ownership of the car. When a person fails to pay EMI’s ( Equated Monthly Instalments ) on time even after notice and reminders in that case the bank has the authority to call back the car. The owner can pay the dues and take the car back.

For this type of loan, banks are very flexible. They provide full and even partial funding in the form of a loan for the car. Car loans help people by providing funds for their car and accepting small payments for the same. Many banks also give zero% charge on foreclosure which means if the loan is to be settled by the borrower before the maturity of tenure there won’t be any charges levied by the bank. 

Some eligibility factors for self-employed individuals and professionals are:- 

1) The turnover of the business or individual should be above the threshold limit given by the bank. The limit might vary from bank to bank and on different cars to be purchased.

2) The individual should be above the age of 21 and below the age of 65.

3) The individual should be working for at least 2 years and 1 year if employed under someone else. 

Therefore these are the only basic requirements that a financial institution might need to provide an individual with a car loan. A car loan can not only help these individuals by fulfilling their dreams but also making their dreams affordable. After the loan is provided by the bank to the individual, he is liable to pay an EMI every month. An EMI is a part payment of a loan that includes the person’s interest liability also towards the bank. This EMI can be calculated by anyone without even applying for a loan by a tool called Car Loan emi calculator. This is a tool that can calculate the EMI liability of the person every month. One has to enter three values namely Amount which is the loan value sought to be taken, Interest which is the percentage of interest that would be charged by the loan offering bank and Tenure which is the time duration for which the loan is to be sought. Once all the values are inserted by the individual in the calculator the result is shown almost instantaneously. The result is the EMI that the person has to pay to the bank in case a car loan is taken according to the input values. Therefore car loan breaks the long going tradition of cars to be exclusive for only the rich. This loan enables even a normal citizen to dream of a car. Paying in small parts enables a whole new segment of people to buy a car. No down payment or full payment needed, just the ability to pay EMI’s is needed.

A car is not only for the rich and upper class. A car is not only for the employed and constant earners. Car loans ensure any capable person irrespective of their background or a constant source of income can avail this facility and get home their dream car.

Also Read:- Is CIBIL Score Important for Credit Cards 

Applying for a car loan is one of the most accessible processes. You can simply get a car loan by following some basic steps. Almost 85% of the banks and Non-Banking Financial Companies (NBFCs) in India offer car loans. Although each lender has its process designed to apply for a car loan, the basic procedure and requirements are almost the same for every bank.

There are a lot of variables that should be checked before applying for a car loan. The first and the basic one is to narrow your eligibility criteria. You can quickly check your eligibility criteria by visiting the bank or checking their online website.
The other factors that should be kept in mind are:-

Credit Score:- Check your credit score and then compare it with the bank's requirement. If your credit score is low, then you'll have to make efforts to bring it up. But if your credit score is high, you'll get many benefits, and you can even negotiate the interest rate with the bank.

Repayment:- Check your repayment structure and the tenure you've selected. You can calculate your EMI along with your budget using some online tools like a Car loan emi calculator and then choose the right option for you. However, it is recommended to keep your loan tenure as short as possible to avoid paying more interest. 

Loan Amount:- Always choose the loan amount according to your repayment capacity and income. Don't choose an amount that will drain your income or budget too much.

Interest Rate:- There are a lot of banks that offer car loans. So it's better to make your decision after comparing multiple banks along with their interest rates. And then choose the one that provides the lowest interest rate.

After you've decided these things, it's time to apply for a car loan. There are two methods that you can use to apply for a car loan. The methods are:-

Online Application:- The first option is to apply for a car loan using the bank's online website. It is so convenient that you can get your loan approved at the comfort of your home. You get the flexibility to compare and then choose the right one for you. You can also track your application process easily using their 'track' feature. Another advantage of online applications is that the whole process is speedy because you're doing it online, and you don't have to wait in line for your turn. Many banks (like Bank of india car loan or State Bank of India) have created mobile applications for these purposes.

Offline Application:- This type of method has its advantage. The first advantage is that you get to have a verbal conversation with the bank, and you get to present your case more efficiently. So you can talk with the bank manager, and then you can find a solution for your problems.

So after you've selected a method that you'll use to apply for a car loan, then you'll have to move ahead with the procedure.

Application form:- You'll have to fill the application form of the desired bank. Fill out all the necessary details and other requirements.

Documentation:- The next step is to submit all the necessary documents required by the bank. These documents will help you to get through the verification process quickly. Once you've attached all the required documents, then you can submit the form to the bank.

The documents required are:

Identity proof:- Aadhar Card, Pan Card, Passport or Driving

License Income Proof:- Form 16, Bank Statement or Payslip

Address Proof:- Electricity Bill, Telephone Bill or any other Utility

Bill Verification:- After your document submission, the bank will take 2-7 business days to verify your documents and to confirm whether or not your application should be approved. 

Disbursal:- And once the bank has approved your application, the loan amount will be transferred to the dealer's bank account within 24 hours. The bank may also provide the dealer with a cheque or a DD ( Demand Draft), but it usually depends on the bank.

Conclusion

There are a lot of banks that provide car loan facilities. So choose your decision carefully after comparing all the options available in the market. You can even consult a financial advisor for help, but make sure that you wisely decide.

Read More:- Car loan availing process offline online 
 

It is a good idea to take in mind all the factors that will affect the loan. And check whether or not they fit according to your needs and requirements. 

The factors are mentioned below: 

• Loan Amount:- There are a lot of banks that have different limits to the loan amount. Some only provide a certain loan for INR 15 lakhs, whereas some provide it till INR 25 lakhs. So the loan amount differs from bank to bank. But be sure only to take the amount that will be easier for you to repay. Some banks provide an extra amount than what you need, so don't fall for that and only take the amount you need. Because if you're unable to pay the loan amount along with the interest rate, then your asset will be seized, or it will negatively affect your credit score.
  
  
• Capacity:- Check your budget capacity along with your monthly or annual income to confirm that you'll be able to repay the amount along with the interest within the loan tenure. You can use tools like an EMI calculator to check whether or not you'll be able to pay the loan amount in instalments. The repayment amount is usually 60% of your monthly income. So check whether you'll be able to cover other expenses like child's education fee, utility bills, ration and miscellaneous expenses after deducting the EMI amount.
  
  
• Budget:- It is an essential factor to check your monthly income. And whether you'll be able to pay other expenses after deducting the EMI instalment. And you can't miss a single EMI instalment because you'll have to pay an additional fee if you do that. So it's advisable to plan your budget accordingly, deduct unnecessary expenses, and follow strict spending until your loan is completely paid off.
  
  
• Credit Score:- If you're applying for an unsecured loan, then you'll have to maintain your credit score. It is usually a range of numbers between 300-900 that describes your creditworthiness. The minimum credit score accepted is 750, but if your credit score is above 850, then you can get many benefits like discounts on interest rates, charges or fees. But if your credit score is low, then either the bank will reject your application, or they will charge you with a high-interest rate. So it's better to maintain your credit score.
  
  
• EMI:- There are a lot of EMI options available in the market. And each EMI option is designed for different individuals. The EMI is calculated according to your loan amount, interest rate and loan tenure. The EMI charged by the bank does not exceed 60% of your monthly income. But it usually differs from bank to bank. You can calculate the EMI you'll have to pay in advance using some online tools like a car loan EMI calculator. Some banks allow you to make a down payment, so you'll have to pay less loan amount by doing this. So if you pay a high amount of down payment, then the monthly EMI you'll pay will automatically decrease.
  
  
• Charges:- There are a lot of charges that are charged by the banks apart from the interest rate or loan amount. There are charges like foreclosure charges or application charges which can be avoided if you choose a suitable bank. Some banks don't charge these, whereas others do. So you'll have to do perfect research where you find out about the banks that will provide you with the loan you want at a low-interest rate and charges. There are certain charges that can also be avoided if you repay the loan amount on time along with interest.
  
  
• Terms and conditions:- Read all the terms and conditions stated by the bank carefully. Don't sign any papers until you're fully aware of the content that's on that paper. 

Conclusion: There are certain loan agencies that help you compare banks and choose the best one according to your need and requirement. They also help you throughout the loan application process; it's their job to make sure that you're familiar with all the terms and conditions before signing the document.