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Home Articles How to Apply for Car Loan?

How to Apply for Car Loan?

IndianMoney.com Research Team | Updated On Friday, February 15,2019, 05:37 PM

4.0 / 5 based on 2 User Reviews

How to Apply for Car Loan?

 

 

What is car loan?

Car loan is a type of auto loan, which enables borrowers purchase cars. Most youths these days purchase their first car with the help of a car loan. Cars can be considered as a way of displaying luxury or a basic transportation need. Currently, car loans are offered at an interest rate between 8-15% a year.

Eligibility Criteria to Apply Car Loan

Eligibility criteria to apply for a car loan vary across lenders. Below mentioned are the general eligibility criteria to apply for car loans:

  • The applicant must be an Indian citizen.
  • The applicant must be at least 21 years old.
  • The applicant must possess PAN card.
  • The applicant must be employed for at least one year, in case of self employed; the applicant’s business must be at least a year old.
  • The applicant must have a constant source of income either by way of salary or business.

SEE ALSO: What is the Finance Bill?

How to Apply for Car Loan online?

Applying for a car loan has become extremely easy. You can apply for car loan online by following the below mentioned steps:

  • Log on to the official website of lender.
  • Click on apply for ‘car loan online’
  • New tab might be opened.
  • Fill the online application form.
  • Upload the requisite documents.
  • Submit the application; you will get a call from the lender.

Want to know more on Car Loans? We at IndianMoney.com will make it easy for you. Just give us a missed call on 022 6181 6111 to explore our unique Free Advisory Service. IndianMoney.com is not a seller of any financial products. We only provide FREE financial advice/education to ensure that you are not misguided while buying any kind of financial products.

SEE ALSO: DigiLocker - 7 Things You Should Know About DigiLocker

How to Apply for Car Loan?

How to Apply for Car Loan offline?

You must follow the below mentioned steps to apply for car loan offline:

  • Walk into the nearest branch of the lender
  • Fill the offline application form
  • Attach photocopies of the requisite documents
  • Submit it at the branch.

Documents Required to Apply Car Loan

Below mentioned are the documents required to apply for car loan:

  • Duly filled application form
  • Latest photograph in the prescribed size
  • PAN card
  • Valid identity proof:
  • Aadhaar card
  • Valid passport
  • Valid driving license
  • Voter ID
  • ID card issued by the employer
  • PAN card
  • Valid address proof:
  • Telephone bills
  • Electricity supply bills
  • Water supply bills
  • Ration card
  • Gas connection bills
  • Property tax assessment
  • Passbook attested by the branch manager
  • Latest three months payslips
  • Latest income tax returns statement
  • Bank account statement of last six months
  • Business ownership documents if the applicant is self employed.

Car Loan Interest Rate

Table below shows the car loan interest rate offered by the popular lenders:

Bank

Car Loan Interest Rates

Lowest EMI per Lakhs for Max Tenure

Maximum Loan Amount

HDFC Bank Car Loan

9.25% Fixed

Rs. 1,622 for 7 years

100% of ex-showroom price

SBI Car Loan

9.20% Floating

Rs. 1,619 for 7 years

85% of on-road price

ICICI Bank Car Loan

10.75% Fixed

Rs. 1,699 for 7 years

100% of ex-showroom price

Axis Bank

9.25% Fixed

Rs. 1,478 for 8 years

90% of ex-showroom price

IndusInd Bank

10.65% Fixed

Rs. 2,157 for 5 years

85% of ex-showroom price

Kotak Bank

11.50% Fixed

Rs. 2,199 for 5 years

90% of ex-showroom price

PNB

8.75% Floating

Rs. 1,596 for 7 years

85% of on-road price

Union Bank of India

9.20% Floating

Rs. 1,619 for 7 years

85% of on-road price

Central Bank of India

9.00% Floating

Rs. 1,609 for 7 years

90% of on-road price

Andhra Bank

9.40% Fixed

Rs. 1,629 for 7 years

85% of on-road price

IDBI Bank

9.00% Fixed

Rs. 1,609 for 7 years

90% of ex-showroom price

Federal Bank

9.15% Fixed

Rs. 1,617 for 7 years

90% of ex-showroom price

Bank of India

9.50% Floating

Rs. 1,634 for 7 years

85% of on-road price

Bank of Maharashtra

9.25% Floating

Rs. 1,622 for 7 years

85% of on-road price

Corporation Bank

9.60% Floating

Rs. 1,640 for 7 years

85% of ex-showroom price

Indian Bank

9.50% Floating

Rs. 1,634 for 7 years

85% of on-road price

Bank of Baroda

8.90% Floating

Rs. 1,604 for 7 years

85% of on-road price

OBC

9.05% Floating

Rs. 1,611 for 7 years

85% of on-road price

United Bank of India

9.10% Floating

Rs. 1,614 for 7 years

85% of on-road price

Is it good to buy a car loan?

Buying a car is a very special moment in everyone’s life. Not everyone can afford a car on their own, without availing a car loan. This is when a car loan comes in handy. Car loan facilitates buying a car. Car loan helps purchase a car with minimal down payment.

You can payback the car loan through EMIs thereby reducing your loan burden. Car loan is certainly good if you have to purchase a car at a young age.

Benefits of Car Loan

  • Makes buying a car easy: Availing a car loan makes it easy to purchase a car. There are lenders who finance up to 100% of the ex-showroom price of the car. 
  • Flexibility in choosing loan tenure: Lenders offer tenure of up to 7 years for a car loan. You can choose the tenure as per your wish and convenience.
  • Loans for second hand or owned car: Most lenders offer loans on used cars. But, the interest rate on loans for used cars will be higher and the loan to value (LTV) ratio will be lower when compared to a new car loan.
  • Negotiation on interest rates: Car loan interest rates can be negotiated. Lenders are open to negotiation on car loans unlike home loans. This is possible if you have a good credit score.
  • Collateral is not required: There is no need of furnishing collateral for car loan as the car purchased through the loan itself is pledged as the security for the loan. The lender would seize your car to liquidate and recover the loan in case you fail to repay.
  • Flexibility in choosing the mode of payment: You can choose your own mode of payment to repay the car loan. However, the repayment shall be made through EMIs. You can pay EMIs by cash or post dated cheques or ECS, as per your convenience.
  • Flexibility to choose either fixed or floating interest rate: You can choose between fixed and floating interest rates.

How to calculate EMI on Car Loan?

A car loan EMI depends on the below mentioned factors:

  • Total loan amount required
  • Rate of interest
  • Loan tenure

Formula to calculate home loan EMI is:

E =  p*r (1+r)^n 

       [(1+r)^n]–1

E is the EMI payable

P is the Car loan Principal Amount

r is the interest rate value computed on monthly basis

n is the loan tenure in the form of months.

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