Once upon a time, owning a car was something that was out of reach for many. For many, it’s still one of the biggest milestones in life. This is due to the huge amounts of money needed to buy a dream car. Today, owning a car is not a Herculean task as most banks easily provide financing options for both used and new cars. One can easily pay off the borrowed money through EMIs. Also, one can either take a loan for buying a new car or a used car. While buying either type of vehicle has its own set of benefits, new car loan interest rates are lower. They are also a tad easier to obtain as banks face a lower risk of losing their money when financing a new car. This is the reason for used car loan interest rates to be higher. Here, in this post, we’ll tell you in detail about the new car loan.
Below, we go on to highlight all the steps that are required to take a car loan. Our description includes some of the terms and factors you need to be aware of. The following information will not only help you understand the entire loan application process better but will even assist you with making efficient financial decisions and, therefore, plan your finances better.
Until a few decades ago, conditions used to be such that owning a car was considered a luxury. Today, however, having a car is a necessity and something that increased purchasing power has easily ensured for many. One of the biggest reasons that have helped more and more people easily purchase a car is opting for a car loan.
That said, thanks to inflation and the advent of new technologies, purchasing a car is no longer an easy task as even an entry-level small car today costs upwards of Rs 4 lakh after the inclusion of the taxes. Hence, keeping in mind the huge demand for both new and second-hand cars, most leading banks in India offer car/auto loans. Through this finance option, one can easily purchase a car and pay for it through EMIs.
As you must be already aware, there are several banks in business in our country. These include everything from state-run organisations like the State Bank of India (SBI) to private banks like ICICI. These baks mostly offer car loans at different rate of interest. That said, these rates aren’t fixed and tend to vary as per your credit score. Also. most banks offer finance of up to 85% of on-road price and 100% of ex-showroom price. Also, most banks offer a loan tenure of up to 7 years but there are some that offer loans only for tenures of 3 years and 5 years. Also, you can use the car loan EMI calculator to figure out the EMI you’ll have to pay for a specific amount over a certain loan tenure using the car loan EMI calculator
|Bank||Car Loan Interest Rates||Maximum Loan Tenure||Maximum Loan Amount|
|HDFC Bank Car Loan Rates||8.10% Fixed||7 yrs||100% of ex-showroom price|
|SBI Car Loan Rates||8.00% Floating||7 yrs||85% of on-road price|
|ICICI Bank Car Loan Rates||9.30% Fixed||7 yrs||100% of ex-showroom price|
|Axis Bank Car Loan Rates||9.25% Fixed||7 yrs||100% of on-road price|
|IndusInd Bank Car Loan Rates||10.65% Fixed||5 yrs||85% of ex-showroom price|
|Kotak Bank||11.50% Fixed||5 yrs||90% of ex-showroom price|
|PNB||8.75% Floating||7 yrs||85% of on-road price|
|Union Bank of India||8.60% Floating||7 yrs||85% of on-road price|
|Central Bank of India||9.00% Floating||7 yrs||90% of on-road price|
|Andhra Bank||9.40% Fixed||7 yrs||85% of on-road price|
|IDBI Bank||9.30% Fixed||7 yrs||90% of ex-showroom price|
|Federal Bank||9.15% Fixed||7yrs||90% of ex-showroom price|
|Bank of India||9.50% Floating||7 yrs||85% of on-road price|
|Bank of Maharashtra||9.25% Floating||7 yrs||85% of on-road price|
|Corporation Bank||9.55% Floating||7 yrs||85% of ex-showroom price|
|Indian Bank||9.65% Floating||7 yrs||85% of on-road price|
|OBC||9.05% Floating||7 yrs||85% of on-road price|
|Bank of Baroda||8.90% Floating||7 yrs||85% of on-road price|
|United Bank of India||9.10% Floating||7 yrs||85% of on-road price|
One can’t avail a car loan without submitting a set of documents to the lender. These documents often vary from one lender to another but mostly, documents that offer a well-established proof of your age, income and address are required by the lenders for successful and easy processing of the loan amount. The details of the documents required for new car loan can be found in the table we have below –
|Signed Application Form||Required||Required|
|Identity Proof||PAN card, Passport, Driving License, Aadhaar Card, Voter ID, Government issued i-card||PAN card, Passport, Driving License, Aadhaar Card, Voter ID, Government issued i-card|
|Certificate and Proof of Business Existence||PAN , sales tax/ excise/ VAT/ service tax registration, Copy of partnership deed, Trade license, certificate of practice, registration certificate issued by RBI|
|Address Proof||Passport, Driving License, Election ID card, Electricity/ Telephone/ Mobile bill/ bank statement (not more than 3 months old)||Bank statement, utility bill, Registry copy, lease or rent agreement, TAN allotment letter|
|Age Proof||PAN card, Passport, Driving License, Voter id card, Birth certificate, Employee ID card (only for PSU/ Government employees), School/ college leaving certificate||PAN card, Passport, Driving License, Voter id card, Birth certificate, Employee ID card (only for PSU/ Government employees), School/ college leaving certificate|
|Income Proof||Form 16, last 3 months salary slip, last 3 months’ bank account statement showing salary credit||Last 2 years ITR, last 3 months bank account statement|
|Car Quotation||Quotation of cost of the car selected from the dealer||Quotation of cost of the car selected from the dealer|
Not everyone can get a new car loan as there is an eligibility criteria one should meet for him or her to successfully obtain a car loan. This criteria includes factors of age, income, credit score, profession and even work experience. The lenders have a set criteria to consider one eligible for a car loan as it minimises the risk of payment defaults by the borrower. In the table we have here, we’ve listed out the new car loan eligibility criteria-
|Minimum and Maximum Age||18 years – 65 years |
Please Note: Some banks require the borrower to have a minimum age of 23 years
|Loan Amount||Most banks offer a loan of up to Rs. 50 lakhs. However, some banks provide a maximum loan of up to Rs. 1 crore|
|Net Monthly Income||Minimum Rs. 18,000 per month|
|Employment Type||One needs to be either salaried, self employed or businessmen for an interest rate of up to 20.00%|
|Minimum Work Experience||Salaried: Must have at least 1 year of work experience. In case of self employed, the business existence must be of at least 5 years and an ITR of minimum of 2 years|
|CIBIL Score||CIBIL 700 & more |
Please Note – Banks prefer to lend money easily and at lower interest rates only to those who have a high credit score (CIBIL)
In order to get a car loan online at the lowest possible rate of interest, one should take care of the following do’s and don’ts –
|Check best discount and offers – Always check current offers and car loan interest rates offered to employees of large reputed companies||Do not apply for loan amount more than what you are eligible for –Applying for an amount higher than your eligibility may lead to rejection of your loan application|
|Compare car loan rates based on loan amount – Some banks offer lowest interest rate car loans for high loan amount||Do not apply with multiple banks – Simultaneous loan applications get recorded in your CIBIL report and can hurt your chances of getting a loan|
|Discount for tenures – Banks may offer lower rates on car loan for certain tenure||Your salary bank may not offer the cheapest loan – Various banks keep offering attractive schemes to acquire premium customers. Hence, salary bank may not be the best option|
A new car loan offers the following benefits-
In case you’ve been wondering, refinancing of a car means having a new car loan from a new lender replace an old one from the original lender. Refinancing a new car loan has the following benefits-
There are multiple new car loan schemes and one should choose the option that is best suited to him in terms of EMI payment. Below, have discussed the new car loan schemes that are being offered by most of the lenders out there in the market –
A: Car loans are required to purchase a new car or used car easily by paying instalments every month instead of making a large payment at once at the time of the purchase of a vehicle.
A: You can apply for a car loan online or by directly visiting a bank branch or even though the sales person at the car dealership.
A: Car loan are generally for 36 months to 84 months.
A: Apart from rate of interest, there are two types of charges being charged by the banks.
– Car loan processing fee
– Car loan preclosure fee
A: Car loan CIBIL score is very important as it indicates your repayment records and hence, banks can offer you a higher loan amount easily.
A: Yes, you need to have an account in your name to get a car loan from a bank.
A: Yes, you can apply for car loan jointly with a co-applicant (either be your spouse or your parents).
A: Yes, in case you do not pay on time, the default will even affect the CIBIL score of your co-applicant.
A: Interest on car loan mostly depends upon loan tenure, down payment, credit report and your net income.
A: Yes, if you are getting a loan at a lower rate of interest, you can opt for car loan balance transfer
A: Yes, you can get car loan top up.
A: It is not out of ordinary to have your loan application rejected, especially if you are already having many loans in your name. If this is the case, the following can be done –
– One can have his spouse as the co-applicant to boost the combined earning levels and get the required loan amount.
– One can even clear the old loans so that you can get a new loan easily
– Balance transfer of your existing loans so that the rate of interest on loans can come down and the additional loan can be availed.