Car Loan: Benefits, Eligibility, Documents and Interest Rates of different Banks

Car Loan is the simple means to a glorious life milestone, owning your dream car. Almost all of us want to own that shiny set of wheels. However, owning a car in India is costly because of which people usually demand financial assistance from banks/ financial institutions that have dedicated loan products in this regard. Almost all private/public sector lenders in India offer loan options with terms and conditions that are highly customer-friendly, affordable and scalable. By qualifying against a very simple list of identity, income and credit history qualifications, you can be the proud owner of your own brand new car.

 Car loan: Interest Rate

  • Interest Rate – 9.25% onwards
  • Processing Fee – Min 0.22% of the loan amount
  • Loan Tenure – 3 to 8 years
  • Prepayment Charges- NIL
  • Loan to Value – Up to 100% of ex-showroom price

Car Loan: Eligibility

  • Net Monthly Income – Minimum Rs 18,000
  • Employment Type –
    • Available for salaried, self-employed and businessmen
    • Interest can range from 9.25% to 20.00%
  • Minimum Age – 18 years (Some  banks require a minimum age of 23 years)
  • Maximum Age – 65 years
  • Loan Amount – Up to Rs 50 lakhs. Some banks give maximum loan up to Rs 1 crore (Loan amount depends upon the value of the car and the EMI you can pay).
  • Minimum Work Experience –
    • Salaried: a minimum of 1 year of total work experience
    • Self Employed: business existence of a minimum of 5 years
    • ITR of a minimum of 2 years
  • CIBIL Score – CIBIL 700 & more

Car Loan: Benefits 

  • It helps you purchase a better car than the one that you can buy with your savings.
  • It allows you to procure a vehicle quickly- without spending too much time arranging for the money through the time-tested concept of ‘saving for it’.
  • A loan is secured against the car itself. There is no need to mortgage any other asset to procure a loan.
  • You get to use the car while paying for it in affordable and low installments.
  • Low vehicle loan rates enable you to invest your surplus savings in alternate investments with high-interest rates.

Maximum loan amount depends upon either on road price or ex-showroom price of the car. Loan Interest Rates are a factor of loan amount, your occupation and the company you are working with. Higher the loan amount, lower will be the interest rate. Popular Banks offering car loan are HDFC Bank, Axis Bank, ICICI Bank, SBI and Canara Bank.

Car Loan: Interest Rates for some Banks

  • HDFC Bank:
    • It is the best car loan for bigger cars at smaller EMIs.
    • Interest Rate – 10.10% onwards
    • Tenure – Up to 7 years
    • Processing fees – Up to Rs 5,310.
  • AXIS Bank:
    • It is best for providing minimum amounts as low as Rs 1 lakh.
    • Interest Rate – 9.05% onwards
    • Tenure – Up to 8 years
    • Processing fees – Minimum Rs 3,500 and maximum Rs 5,500
  • ICICI Bank:
    • It is best for existing customers.
    • Interest Rate – 8.95% onwards
    • Tenure – Up to 7 years
    • Processing fees – Up to Rs 5,000
  • SBI Bank:
    • SBI Car Loan is best for women.
    • Interest Rate – 9.20% onwards
    • Tenure – Up to 7 years
    • Processing fees – 0.2% of the loan amount + GST
  • Canara Bank:
    • It is best for providing Maximum Loan Amount Without a Ceiling.
    • Interest Rate – 8.90% onwards
    • Tenure – Up to 7 years
    • Processing fees – 0.2% of the loan amount + GST (minimum Rs 1,000 and maximum Rs 5,000)

Car Loan: Documents Required

  • Income Proof:
    • Bank Statement (Last 6 months)
    • Pay-Slips (last 3 months)
    • IT Returns (last 2 years)
  • Proof of Identity and Address:
    • PAN Card
    • Voter’s ID
    • Aadhaar Card
    • Passport
  • Information about Vehicle:
    • Sales Receipts from the Showroom from wherein the Vehicle was Purchased.
  • Proof of Insurance and Driving License:
    • Copies of the Vehicle’s Motor Insurance and your Driving License.

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