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CAR LOAN / VEHICLE LOAN

In today’s life there are many things which have become very common basic needs. Among them cars is also a basic need for everyone. It’s more of a dream for many to have a car. Now you can also make your dream come true as vehicle loans are available at affordable interest rates for even middle-class families. These car loans are also known as auto loans or automobile loans. Borrowing some amount of money from banks to buy a car is known as car loan. Cars can be brought by depositing down payment and rest of the money can be taken as loan from the respected bank which is providing low interest rates based on the model of the car.

There was a time when owning a car was a luxury not all could afford to have. Buying a car was a life milestone for everyone who could shell out those huge amounts of money all at once to buy their dream car. With growing times, changing demographics and emerging car loan lenders, for a majority of the Indian middle class, owning a car today is no longer a luxury, but in fact a necessity made possible by taking a car loan. Finance is provided for purchase of a car or other vehicles either for personal or business use. In the car loans there will be types of taxes, fees and all. All this includes in the total car loan amount provided to the customer. To know more details about the car loans, follow the post. All the basic, important and required details of many different banks are given below here.

Car Loans Benefits and Features

Car loans have many benefits. Some of the benefits for applying for car financing loans in India given below:

1. Monthly payments can be directly debited from your bank account.

2. There is a flexibility to choose the tenure as per your convenience.

3. No collateral required to avail the car loan.

4. Maximum loan amount can be 100% of the on road price of the car.

5. It helps you purchase a car even if you don’t have all the money for it right now.

6. Many lenders will offer an interest rate based on your credit score so a high score to get you a cheaper loan.

7. Full funding available for new cars

8. The loan period is generally between 1 and 8 years.

9. You can get a maximum loan amount up to 3 times the annual salary (for salaried professionals) and 6 times the annual income (for self-employed professionals).

10. Car Loan Interest Rate is calculated on the basis of the profile, loan tenure, and the amount of loan sanctioned.

11. Equated Monthly Instalment (EMI) is worked out for repayment.

12. Early settlement of the pending amount of loan is subjected to the prepayment penalty.

Car Loan Source of Finance

There are two sources of taking car finance. If you are planning for a car and avail a loan then as a customer you have three options.

1. You can avail a loan from any of the banks.

2. You can avail a loan from NBFCs which is (Non-Banking Financial Corporation) like Tata Capital, Bajaj Finance etc.

3. You can also get a loan from the car dealer in which, from where you are buying a car, they will provide the loan for a lump sum amount of money to buy a car. For which you have to pay back that amount through monthly EMI format along with the interest to that amount 

Types Of Car Loan

There are several different types of car loan so that every individual will find at least one car loan that is able to meet their requirements:

1. New Car Loan:

A new car loan is taken out to purchase new vehicles generally from dealerships. Many salaried and self employed individuals are looking to get their dream car that gets higher pay packages. Some individuals have the cash in hand and they prefer to purchase a new car on the spot. There are many banks which provide new car loans with low car loan interest rates.

2. Used Car Loan:

Used car loans are taken by the borrower to purchase a used car from either a second hand car dealer or an individual seller. Sometimes people can’t afford to buy a new car and in such cases, going for a used car is the best option.

Eligibility Criteria to Get a Car Loan

There are some eligibility criteria required to apply for the car loan. One who is going to apply for the car loans has to reach these minimum eligibility requirements as follows.

1. The minimum age of the customer should be 18 years and the maximum age should be 75 years.

2. Salary of the customer should be minimum Rs.10, 000 per month.

3. Car types can be new or used one.

4. 3 years total experience in profession/ business.

5. 2 years should be in my current post/profession of business.

6. Salaried/ self-employed individuals / partnerships have to apply for car loans.

Required Documents for a Car Loan

Any applicant who is going to avail a car loan must have to submit the following documents. These documents are the requirements for the lenders who are providing you the amount of loan. You will need the following documents required while applying for the car loan.

  • Complete and signed application form
  • Password-size photographs
  • Identification proof: PAN card, Aadhar card, Driving Licence, Passport
  • Income proof : Latest Salary slips, bank statement, IT return, Form 16
  • Address proof : Valid passport, Voter id card, Postpaid utility bill (gas bill and electricity bill), Updated passbook or bank account statement
  • Pro forma bill from the seller to ascertain value of the vehicle
  • At times bank may also ask for employment stability proof

Car Loan Fees and Charges 

To apply for a car loan, you have to pay fees and charges applied by the Bank. It covers all charges and fees made by a bank to their customers.The following charges are taken from the Bank is joining fee, annual fee, interest rate, late payments charges etc.

TYPE

CHARGES

Interest rate

7.35% p.a.

Processing fee

Starts from 0.230% of the loan amount

Documentation charges

Rs.550 plus GST

Loan Amount

100% of on road price of the car

Prepayment charges

5% on principal outstanding or interest outstanding for unexpired period of loan (whichever is lower)

Charges for late payment of loans

2% per month on the outstanding instalments

Tenure period

1 year to 8 years

Swap charges

Rs.500 per transaction

Cheque bounce charges

Rs.500 per transaction

Statement of account charges

Rs.200 per statement

Prepayment statement charges

Rs.200 per statement

Duplicate NOC/ No due certificate charges

Rs.500 per NOC/NDC

Loan cancellation charges

Rs.3000 per loan

Car Loan Do's and Don'ts while applying 

1. Compare the loans offered by all banks and NBFCs and choose the one that suits your requirements the best

2. Compare the rates of interest and see if you have a fixed and floating rate of interest option

3. Be smart about the car you wish to buy. If you're starting your career, you may want to buy a smaller vehicle as buying a bigger vehicle may result in it being difficult for you to repay the loan

4. Read the terms and conditions, and the hidden fees and charges

5. Decide on the insurance

6. Never apply to multiple banks, as it will negatively impact your credit score

In terms of sale in India these are the top 25 cars 

Maruti Ignis

Toyota Fortuner

Honda city

Mahindra XUV 500

TATA Nixon

Maruti Brezza

Maruti Wagon R

Maruti Eeco

Toyota Innova Crysta

Maruti S Cross

Mahindra Scorpio

TATA Tiago

Hyundai Creta

Maruti Swift

Maruti Omni

 

TATA Hexa

Maruti Celerio

Mahindra Bolero

 

Hyundai I20

Maruti Dzire

Mahindra TUV300

Hyundai Eon

TATA Tigor

Hyundai Grand I10

Maruti Baleno

 

Compare other banks car loan interest rate

If you are interested in buying a car through loan and want to know the details of the best available interest rates from different banks, you can check here. Having an own car is not only a dream for many families but it is also a need which serves for transportation. More than a luxury need it became a basic need for the people who travel for long distances. Knowing the correct information before taking a car loan is the knowledgeable thing. Here are the details about the interest rates of the particular banks for the car loans.

Important note-

Interest rates and the EMI (Equated Monthly Instalments) per lakh depend on the various factors like initial down payment, customer profile and the amount taken towards the loan.

BANKS

INTEREST RATE

AXIS Bank New Car Loan

9.05% to 11.30%

AXIS Bank Pre-Owned Car Loan

14.80% to 16.80%

AXIS Bank Loan Against Car

13.99%

AXIS Bank Balance Transfer and Topup Car loan

15.00%

SBI New Car Loan Scheme

8.00% to 10.75%

SBI Combo Loan Scheme

8.70% to 9.20%

SBI Pre-Owned Car Loan

9.75%

SBI Loyalty Car Loan Scheme

8.70% to 9.5%

HDFC Bank New Car Loan

8.80% to 10.50%

HDFC Bank Used car loan

12.75% to 15.30%

HDFC Bank Loan Against Car

13.75% to 16%

Kotak Mahindra Bank Car Loan

8.00% to 24%

Yes Bank Car Loan

9.25%

ICICI Bank Car Loan

9.30% to 12.85%

IDBI Bank Car Loan

9.30% to 9.90%

RBL Bank Car Loan

12% to 14%

IndusInd Bank Car Loan

10.65% to 15.50%

Bank of Baroda Car Loan

8.85%

Bank of India Car Loan

8.95%

Canara Bank Car Loan

7.75% to 10.30%

Indian Bank Car Loan

8.45%

Punjab National Bank Car Loan

8.9% to 9.35%

Getting your Car Loan approved faster

These are the following ways to getting your loan approved faster i.e :

1. Check Your Credit Report

Several organisations give you the option to check your credit report without any charge once a year. 

2. Pay your bills on time

One thing you need to ensure that your loan is approved is a good credit score. You can achieve this by paying your credit card bills on time or your monthly EMIs on the stipulated date. 

3. Don’t borrow too much

By paying a larger amount upfront as down payment, you can reduce the loan amount, which means that it will be easy to pay it off quickly. Remember, a small loan amount means smaller EMIs or a shorter payment schedule.  

4. Choose a loan plan that fits your budget

Ensure that you choose a loan scheme that enables you to easily pay off the EMI of the car loan at the earliest. 

5. Read the terms and conditions carefully

Each loan has a specific set of terms and conditions. It is important to read these conditions carefully, as it will help you choose one loan over the other

6. Get car insurance

While offering a loan, the main concern of banks and NBFCs is not to incur any losses.

Car Loan EMI and How to Calculate 

EMI (equated monthly installment) is the amount that is to be paid on a monthly basis against the loan availed from the financier. The EMI is the sum of two components, namely principle and the interest. One can ascertain the amount of EMI on the car loan by using the EMI calculator on the website. The EMI calculator captures basic personal details, income details, loan value and tenure and generates the approximate EMI payable for the car loan availed. The EMI so generated may differ from the actual payout that may happen subsequently. This would however, be indicative of the amount to be set aside on a monthly basis from the household budget. This gives a clear view of the affordability given the current net earnings and household budget of the individuals.

The mathematical formula for calculating EMIs is: 

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

Where,

P stands for the loan amount or principal,

R is the interest rate per month 

N is the number of monthly instalments.

Bank offered Financial Products 

BUSINESS LOAN

  CAR LOAN

COMMERCIAL LOAN 

  EDUCATION   

   LOAN

  GOLD LOAN

  HOLIDAY LOAN

  HOME LOAN 

LOAN AGAINST   

PROPERTIES 

LOAN  AGAINST   

SECURITIES

  PERSONAL  

  LOAN

PROFESSIONAL   

   LOAN

  TWO WHEELER LOAN

FAQ's On Car Loan

1. How much processing fee is charged by car loan?

The processing fee charged by car loan starts from 0.230% of the loan amount.

2. What is the minimum and maximum tenure period of car loan?

The minimum tenure period is 1 year and maximum tenure is 8 years to apply for a car loan.

3. Do I need to provide security for the loan?

No, there is no need to provide additional security or guarantor. The loan will be provided against hypothecation of the car.

4. Is there any loan amount charged to apply for a car loan?

Yes, the loan amount charged to apply for a car loan is 100% of the on road price of the car.

5. How many types of car loan?

There are two types of car loan i.e. :

  • New car loan

  • Used car loan 

6. How much documentation charges are applied by car loan?

Yes, documentation charges are applied by car loan and it should be charged Rs.500 plus GST.

7. Which car models are financed by car loans?

Almost, all small, medium and large cars can be bought with a car loan. However, do check the fine print of the bank’s brochure to check if there are any exceptions.

8. What is the minimum and maximum age the applicant is required to get a car loan?

The minimum age of the applicant is 18 years and maximum age is 75 years to get a car loan.

9. Can the loan be foreclosed?

Yes, it can be foreclosed on the payment of foreclosure fee of up to 3% on the outstanding principal amount along with Service Tax.

10. Which formula is used to calculate EMI of a car loan?

The mathematical formula for calculating EMIs is: 

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]

Where,

P stands for the loan amount or principal,

R is the interest rate per month 

N is the number of monthly instalments.

11. Is credit profile important?

To banks, your credit profile is the most important factor they will consider before funding you. Your credit profile tells banks if one is able to and intend to pay back the loan.

Last Updated on : 21/Nov/2020

Know More About

Car Loans

You're eligible for a Car Loans if you:


Are legally adult enough to handle it


Have still got it


Get a regular pay check


Make more than a basic buck

Your eligibility depends on:


Earn more than minimum income required


Maximum allowed Car Loans is Rs. 10K to Rs. 45 lakhs


EMIs of other loans loweryour eligibility

Boost your eligibility by:


Pay off your credit card bills


Choose longer tenure loan up to 5 years

Nothing gets done without that paperwork (which we'll happily carry over to the bank for you, no sweat). Here's what you'll need:

  • 1. Photo ID and age proof
  • 2. Signed application form with photograph
  • 3. Residence proof
  • 4. Last 6 months bank statement
  • 5. Documentation for salaried applicants:
    • Last 3 months salary - slips
    • Form 16 or Income Tax Returns
  • 6. Documentation for self-employed applicants:
    • Last 3 years Income Tax Returns with computation of Income
    • Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account

Car Loans Interest Rates

Updated on 25 Nov 2017

Car Loans Details
Interest Rate (Monthly reducing balance) 9.05% - 11.3%
Processing Fees Varies with bank
Loan Tenure 1 year to 8 years
Pre-closure Charges Varies with bank
Guarantor Requirement Varies with bank

Car Loans EMI Calculator

Loan Amount

|
1L
|
50L
|
100L
|
150L
|
2Cr

Interest Rate

%
|
5
|
10
|
12.5
|
17.5

Loan Tenure

|
1
|
10
|
20
|
25
|
0
|
120
|
240
|
300


Your Monthly Loan EMI


₹24,959