What Is A Car Loan & How To Get A Car Loan?

By Author: Rahul Manu
Total Articles: 2
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A car loan is a sum of money borrowed to purchase a new or used car by pledging the vehicle as collateral. Banks and NBFCs(Non-Banking Financial Companies) offer a car loan. A car is considered a status symbol. A car can make your life easy. A car loan is repaid through monthly installments (EMI). There are mainly three types of car loan they are listed below

New Car loan:

A new car loan means a loan taken to buy a new car. Banks offer car loans at an interest rate of 6.8% to 12% for a loan tenure of 1 to 7 years. Bank provides almost 100% of showroom price as loan.

Used Car Loan:

This car loan is given for buying a used car or a preowned car. Normally banks and NBFCs offer 80% to 90% of the price of the car at an interest rate of 9% to 18%. A used car loan tenure is 1 to 5 years. As the tenure increases the monthly installment decreases.

Loan against the car:

A loan against the car means pledging our car to a bank or NBFCs to obtain funds. Some banks or NBFCs offer 100% of the market value of the car. The must be less than 5 years old otherwise the loan will be rejected by the bank. ...
... The typical loan term is one to five years. Compared to other loans the rate of interest will be high. The interest rate range from 12% to 18%.

Feature and Benefits of a Car loan

Listed below are the benefits of a car loan if you are taking a car loan at the bank of Maharashtra
Low EMI
Higher loan Amount
Approved Car Dealer
Simplified Disbursement
No processing fees
No Hidden Charges
No prepayment penalty

Documents Required

Proof of Identification
Aadhar card
Driving License
PAN card
Passport
Proof of residence
Electricity Bill
Telephone Bill
Aadhar card
Passport
Two passport size photographs
For salaried person
Copy of latest salary slip for last 3 months
Copy of IT return for last 2 years
Bank account statement for last 6 months
For nonsalaried person
Latest 3 years IT returns
Shop establishment act
Tax registration copy
Company registration license
Bank statement for last one year

Car Loan Eligibility Criteria

Minimum age 21, Maximum age 65
Minimum annual income 3 lakhs
Self or salaried employee
Minimum of one-year work experience with the current employee

Car loan Procedure

The procedure of car loans is been simplified by the banks and NBFCs. Now everything has become online no direct visit to the bank is required. The entire process is listed below.

Form Fill Up: The first step is form filling. In this form, we have to give our basic details name, age, income, address, job, experience.

Document Verification: After the form fill up we need to upload the required documents. Because the car was used as collateral, documents connected to it had to be provided.

Loan Approval: If the bank verified all the documents then only the bank will approve the loan. They will approve the loan amount within 2 days.

Loan Disbursal: After a certain time, the loan amount is disbursed to the applicant. To put it another way, banks lend a certain percentage of the money that a buyer has placed into the purchase of his or her vehicle.

Approval Factors of Car Loans in India

CIBIL Score: When it comes to car loan approval in India, the CIBIL score is extremely important. The CIBIL score is a rating given by the CIBIL Bureau to an individual consumer based on his or her prior loan repayment history.

Age of the Car: When applying for a car loan in India, the age of the vehicle is a very essential factor that lenders assess. The car's age has a significant role in determining its value. In India, a car's value usually begins to depreciate by at least 10% the moment it is driven out of the dealership. After then, the value continues to depreciate with each passing year.

Car loan repayment period: In India, vehicle loans are typically repaid over a period of 1 to 7 years. The borrower can choose the payback period that is most convenient for him or her. The payback period plays an important part in determining the monthly EMIs. The EMIs are lower if the tenure is longer, and they are naturally higher if the term is shorter.