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Car Loan

The dreams of this era’s individuals have no boundaries. It is every common man’s dream to own a car of their own, but the inflation rates added with other financial commitments makes it difficult to spend the hard earned money on luxury things. To ease out the burden faced by the common man most of the banks and well known financial institutions in India are offering car loan at an affordable rate of interest which can be repaid by the borrower over a fixed tenure of time.

Let’s take a sneak peek into the different aspects related to the car loans in India.

Bank Name Interest Rate Processing Fee Loan Amount Tenure
Allahabad Bank Car Loan 9.10%, Floating 1.00% of loan amount Three time Net Annual Salary 84 months
Andhra Bank Car Loan One Year MCLR + 0.70 % for New Cars Rs 1000 - Rs 25000 + (GST charges) 50 lakhs 84 months
Axis Bank Car Loan 9.25%-11.50%, Fixed Up to Rs 5,500 1,00,000 - 100% of on-road price up to 36 months
Bank of Baroda Car Loan 8.60% - 10.35% 0.5% of loan amount Maximum 1 crore 84 months
BOI Star Vehicle Loan 9.30-9.90%, Fixed 500+ applicable charges 50,00,000 7 Years
Maha Super Car Loan Scheme 9.00% - 9.25%, Fixed - max Rs 100 lakhs max 84 months
Canara Vehicle Loan 9.00% - 9.65%, Floating 1,000 to ₹5,000 90% of on-road price of vehicle 84 months
HDFC New Car Loans 9.25% - 10.25%, Fixed 0.04% of loan amount 100000 1-7 Years
ICICI Bank Car Loan 8.65% - 18.00%, Fixed 3,500 up to 100% of show room price of the new car 7 Years
PNB Car Loan for Public MCLR + 0.60% - MCLR +0.95% 1000 above Rs 6,00,000 84 months
PNB Pride Car Loan for Government Employees MCLR+0.20%-MCLR+5.00% Nil Maximum of 100 lakhs or 25 time net monthly salary 7 years
SBI New Car Loan Scheme 9.30% -9.80%, Floating 0 - 7 Years
Union Bank of India Car Loan 9.20%, Fixed 0.50% of loan amount (maximum of Rs 15,000+ service taxes as applicable) maximum of Rs 125 lakhs 7 Years
Yes Bank Car Loan 10.25% - 12.25%, Fixed 1% of loan amount or Rs 10,000 (whichever is lower) Maximum Rs 500 Lakhs 1-7 Years

What is a Car Loan?

The term car loan refers to the kind of loan which a borrower uses to purchase a car.

The individual who secures the loan amount has to pay back to the borrower (bank or financial institution) within a period of 24 months – 60 months. Car loan usually includes various fees and taxes which will be added to the total loan amount.

Features of Car Loan

The following are the features of Car Loan

• Loan Tenure – The tenure of the car loan is between 1 year to 7 years. The loan term mostly depends on the loan amount as well as the bank which offers the loan. Higher the loan tenure lesser the EMI amount on a car loan.
• Interest Rate – The interest rate usually depends on the bank with which the applicant is securing the loan. Higher interest rates will increase the EMI and vice versa.
• Loan Amount – In the case of car loans, the lender will lend the loan based on the road price of the car. The borrower can secure up to 3 times the annual salary in case of salaried professional or up to 6 times the annual income in case of employed.

Required Documents for Car Loan

An individual needs to submit the following list of documents to secure a car loan

For Salaried Employees:

• Proof of Identification – Birth Certificate, Passport, Election ID Card, PAN Card, Aadhaar Card, Driver’s Licence, Utility Bills like electricity bill or water bill.
• Proof of Income – Recent salary slips for 3 months from the current employer.
• Statement of Financial Accounts – Recent bank statement for a period of 6 months, credit card statement from banks.
• Proof of Residence – Utility Bills (Electricity bill, Water bill), Passport.
• Duly filled in application form along with recent passport size photograph.

For Self – Employed:

• Proof of Identification – Birth Certificate, Passport, Election ID Card, PAN Card, Aadhaar Card, Driver’s Licence, Utility Bills like electricity bill or water bill.
Proof of Income – Recent salary slips for 3 months from the current employer.
• Proof of Office Address
• Education Qualification Certificate
Income Proof of Self – Employed – Audited finance report for the last 3 years, recent bank statement for 6 months.
Proof of Business – Shop Act License, Certificate of Practice, GST registration certificate, MOA & AOA, Qualification Certificate.
• Proof of Residence – Utility Bills (Electricity bill, Water bill), Passport.
• Duly filled in application form along with recent passport size photograph.

Do’s and Dont’s while choosing a Car Loan

The following are the list of Do’s for a car loan applicant

• Opt for lower interest rate – The interest rates of the loan will add up to the total cost of the loan repaid by the borrower to the lender. The lesser interest rates will be a better option for the car loan applicant as it will help the applicant to save money.

• Compare – One has to thoroughly compare the wide range of options available at the moment before zeroing on the best one when it comes to a car loan. With the advent of technology, one should utilize the best use of internet and check for the various offers provided by several banks and financial institutions.

• Hidden Charges and Fees – The element of hidden charges and fees is largely present in all the kinds of loans offered by the banks to its consumers. One should carefully evaluate it and has to be cautious about the incentives and packages offered by the lender and choose the correct lender to avoid hidden charges.

• Insurance – The insurance amount on the car has to be decided by the owner after evaluating the coverage and cost factors.

The following are the list of Dont’s for a car loan applicant

• Multiple Applications – One should avoid applying for many banks as this will impact the credit score negatively.

• Eligibility – One should not apply for a car loan if it exceeds the eligibility criteria as this will surely result in rejection of the application.

• Evaluating Dealers Carefully – One should always evaluate the dealers offer carefully before taking it as they may not offer the best interest rates.

EMI Calculators for Car Loans

If a borrower is taking a car loan then it is very essential to know the equated monthly instalment (EMI) amount that he/she will have to incur over a period of time until the completion of loan repayment. The EMI calculators helps the individuals to understand the interest amount charged on the total loan amount as well as the duration of the loan. The EMI Calculator acts as a financial tool which helps the borrower to decide the loan amount and accordingly to chalk out a financial plan for safeguarding the future expenses.

Car loans can be availed either for new cars or for used cars.

What is a Pre-owned Car Loan?

A Pre-owned car loan refers to the loan amount which a borrower used to purchase the used car. One can opt for repaying the same in equated monthly instalments (EMI) over the tenure of the loan which includes both principal amount and interest amount.

Eligibility Criteria to get Pre-Owned Car Loan

The following is the eligibility criteria to secure a pre-owned car loan

• The borrower should be aged minimum of 21 years.
• Should have at least 1 year of work or business experience.
• Cars which are aged up to 10 years old are eligible to secure finance.
• Required Identification Proofs and Proof of Address
• Should have a Bank Account.

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