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Car Loan

Car Loan Details

Last Updated 01st Dec 2020

  • A car loan is the sum of money borrowed by the consumers to purchase a car.
  • Avail a car loan for purchasing both new and used cars.
  • Bank provides car loans up to 100% of ex-showroom price of the car. You can also get loans up to 100% of the ex-showroom price of the car.
  • The tenure of a car loan ranges between 7 years to 7 years.
  • Avail refinancing car loan to get an auto loan at a lower interest rate.

Ex Gratia Payment Scheme for EMIs Paid during Moratorium

Apply for Car Loan @ 9.25%*

Car Loan Finance

Buying a car is one of the significant purchases that people make, second only to purchasing a home. There was a time when owning a car was a luxury and thus could be afforded by a few rich. However, with the availability of secure financing options having a vehicle is not just a dream but a necessity that most of us can easily afford. Whether you are planning to buy a new car or an old car, you can finance your car by taking a car loan at affordable car loan rates. The rates for a car loan varies as per the value of car, the loan amount you have applied for and repayment capability of the borrower. You may get upto 100% of the ex-showroom price of the car.

Best Car Loan Providers in India

As per the current rates, HDFC Bank Car Loan Rates offers the lowest car loan interest rate of 8.10%. Here are top banks which provide car loan at lowest interest rates in India:

Bank Car Loan Interest Rates Maximum Loan Tenure Maximum Loan Amount
HDFC Bank Car Loan Rates 8.10% Fixed 7 years 100% of ex-showroom price
SBI Car Loan Rates 8.00% Floating 7 years 85% of on-road price
ICICI Bank Car Loan Rates 9.30% Fixed 7 years 100% of ex-showroom price
Axis Bank Car Loan Rates 9.25% Fixed 7 years 100% of on-road price
IndusInd Bank Car Loan Rates 10.65% Fixed 5 years 85% of ex-showroom price
Kotak Bank 11.50% Fixed 5 years 90% of ex-showroom price
PNB 8.75% Floating 7 years 85% of on-road price
Union Bank of India 8.60% Floating 7 years 85% of on-road price
Central Bank of India 9.00% Floating 7 years 90% of on-road price
Andhra Bank 9.40% Fixed 7 years 85% of on-road price
IDBI Bank 9.30% Fixed 7 years 90% of ex-showroom price
Federal Bank 9.15% Fixed 7 years 90% of ex-showroom price
Bank of India 9.50% Floating 7 years 85% of on-road price
Bank of Maharashtra 9.25% Floating 7 years 85% of on-road price
Corporation Bank 9.55% Floating 7 years 85% of ex-showroom price
Indian Bank 9.65% Floating 7 years 85% of on-road price
OBC 9.05% Floating 7 years 85% of on-road price
Bank of Baroda 8.90% Floating 7 years 85% of on-road price
United Bank of India 9.10% Floating 7 years 85% of on-road price

Documents Required for Car Loan

To avail a car loan, borrowers may need to fulfil different requirements for specific lenders. Here is a list of essential common documents that are required by lenders to process your application for a car loan.

  • Identity Proof: PAN card, Passport, Driving License, Aadhaar Card, Voter ID, Government-issued i-card.
  • Address Proof: Passport, Driving License, Election ID card, Electricity/ Telephone/ Mobile bill/ bank statement (not more than 3 months old).
  • Income Proof: Form 16, last 3 months salary slip, last 3 months' bank account statement showing salary credit.
  • Age Proof: PAN card, Passport, Driving License, Voter id card, Birth certificate, Employee ID card (only for PSU/ Government employees), School/ college leaving certificate.
  • Quotation of the cost of the car selected from the dealer.

Eligibility Criteria for Auto Loan

The eligibility criteria to avail a car loan may vary from lender to lender. The common criteria to avail a car loan is mentioned below:

  • Age: The age limit to get a car loan is between 18 years to 65 years. However, many banks require a minimum age of 23 years.
  • Income: To avail a car loan, you need a monthly income of ₹ 10,000 per month.
  • Profession: Both salaried individuals and self employed professionals can avail a car loan. The interest rates are lower for salaried applicants.
  • Credit Score: A credit score of 700 or above is considered an ideal score for availing a personal loan. However, some banks give personal loans at a credit score of 650 and above.
  • Work Experience: The minimum work experience required to apply for a car loan varies for salaried and self-employed professionals. Salaried individuals should have a minimum experience of 1 year, and self-employed professionals should have business existence of minimum 5 years to avail a car loan.

Checklist for Car Finance

  • Identity proof
  • Residence address and ownership proof
  • Income proof
  • Down payment dealer receipt
  • Car quotation
  • Photo identity proof
  • Bank continuity proof
  • Bank statement
  • 1 passport size photograph
  • Latest ITR
  • Investment proof if you have any Fixed Deposit, Shares, Fixed Assets, etc

Do’s and Don’ts while taking Car Loan

To get best and lowest car loan interest rates online, read the do’s and don’ts mentioned below.

Do’s 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

Features of Car Loan

A car loan has the following features and benefits.

  • Loan Tenure: The tenure of car loan for a new car is usually longer than the used car, and it ranges between 7 years to 7 years.
  • Collateral Required: A car loan is secured against the car itself. Thus, there is no need to mortgage any other asset to procure a loan.
  • Loan Amount: The amount for a car loan depends upon the value of the car and the EMI you can pay and can range between 100% of ex-showroom price to 100% of ex-showroom price.
  • Down Payment: Banks offer car loans at an on-road price or ex-showroom price. You may get a loan either at 80% of the on-road price or 100% of ex-showroom price. Thus, the down payment for a car loan may be negligible.
  • Interest Rates: You can get car loans at both fixed and floating rate of interest. Currently, the car loan interest rate ranges between 8.10% to 9.10%.

Refinancing Car Loan

The term refinancing of a car means replacing the existing car loan with a new car loan from a different lender. You can take a refinancing car loan to avail the following benefits.

  • Reduced interest rates: Borrowers can repay the existing car loan and get a new car loan from the different lender if the interest rates for a car loan is lower for another lender. However, before opting for a car loan with a new lender ensure that the prepayment charges/fees do not exceed the overall reduction in interest rates.
  • Modifying the loan tenure: You can take a refinancing car loan if you want to increase/decrease the tenure of your loan. The tenure of a car loan is inversely proportional to loan EMI, which means that you have to pay less EMI in case of longer car tenure and vice versa.
  • Other modifications: It is likely that you come across better car loan offers in terms of late fees, hypothecation, insurance, application charges, etc. and thus you may choose to take a refinancing car loan to avail better features.

FAQs

Why do I need car loan?

Car loans are usually taken to buy a new car or used car. Car loan rates are given at fixed rate. If you have a low CIBIL score, then you should not apply in multiple banks for car loan as each rejection will drop your CIBIL score.

How can I apply for car loan?

You can apply for car loan in several ways. You can directly visit the bank branch and meet the sales person, contact a car loan agent or apply online at any bank or NBFC’s website.

What is the minimum and maximum tenure of car loan?

Car loan are generally taken for a short period of time. Generally, car loan tenure is between 36 months to 84 months.

What are the charges for car loan?

Apart from rate of interest, there are two types of charges being charged by the banks.

  • Car loan processing fee: This is charged when you apply for the loan. The processing fee charged on car loan is upto Rs. 3,000 of the loan amount and could be reduced if you can bargain.
  • Car loan preclosure fee: This is charged when you close your loan before the completion of loan tenure. Prepayment penalty charged may be upto 5% of the outstanding amount.

Is CIBIL Score for car loan important?

Car loan CIBIL score is very important. Good CIBIL score indicates good repayment record and hence banks can offer you higher loan amount at low rate of interest for car loan. Bad CIBIL Score will result in either loan at higher interest rate or rejection of the loan application. So, make all your payments on time and maintain your CIBIL in order to get best car loan rates.

  • Ex-showroom price is the price of the car including excise duty but excluding local duties and statutory charges.
  • On road price is the price you pay for the car including the ex-showroom price and cost of registration, insurance, octroi, municipal entry tax, road tax and any accessories. The on road price tends to be 15-25% more than the ex-showroom price and may vary from city to city.

Do I need to open a bank account to service my car loan?

Yes, you need to have at least one functional bank account in your name to get a car loan. It is even better if you have an account with the same bank from which you would like to get a car Loan.

Can I apply for car loan jointly with my spouse?

Yes, you can apply for car loan jointly with a co-applicant (either be your spouse or your parents). This helps you to increase your eligibility. Hence you may get higher loan amount as your co-applicant’s income also gets added to your income. In co-applicant cases, the total income is taken into consideration for calculating the eligibility.

Does it affect my co-applicant if I default in car loan?

Yes, if you fail to pay the loan on time then it will also affect your co-applicant. Default in loan will affect his/her CIBIL rating as well.

What are the main factors that affect interest rate of car loan?

Interest on car loan depends upon factors like down payment, loan tenure, credit report and your net income. High income with good CIBIL and maximum down payment can lend you loan at low interest rate.

Can I do balance transfer on car loan?

Yes, if you are getting lower rate of interest, then you can opt for car loan balance transfer and reduce your monthly burden.

Can I get top up on car loan?

Yes, you can get car loan top up but terms and conditions varies from bank to bank.

What should I do if my car loan application gets rejected by bank?

Some possible reasons why your application gets rejected are already running multiple loans and hence a bank may be in doubt about your repayment ability of a new loan.

  • In this case, if you have a spouse who is also working, you can add him/her as a co-applicant to boost the combined salary levels.
  • Clear your old debts first so that your leverage levels come down.
  • Balance transfer of your existing loans so that the rate of interest on loans can come down and additional loan can be availed.

Car Loan Reviews 4.3/5  by 29 customers
MyLoanCare Service
4.4/5.0
Banks Service
4.3/5.0
Sellamuthu P, Namakkal
Reviewed on 08th Sep 2018
4 / 5 stars
HDFC Bank Car Loan Availed in Aug 2018

Fast processing, easy documents collection, interest rate is reasonable, repayment options need to iRead more...

Nimish Goswami,
Reviewed on 19th Jul 2018
5 / 5 stars
HDFC Bank Car Loan Availed in Jul 2018

Mr. Sudhir Kumar helped so much and has great knowledge about market.Read more...

Sinto Jacob, Trichur
Reviewed on 23rd May 2018
5 / 5 stars
HDFC Bank Car Loan Availed in May 2018

applied car loan through myloancare. it was fast processing and got the amount without any delayRead more...

Shiv Machaiah, Bangalore
Reviewed on 16th Mar 2018
5 / 5 stars
Axis Bank Car Loan Availed in Jan 2017

My Loan Care person was quite helpful and gave information in detail. Read more...

Arnav, Ghaziabad
Reviewed on 07th Jan 2018
4 / 5 stars
SBI Car Loan Availed in Dec-18

I got fast processing on my application. All charges were normalRead more...

Krishna Yadav, Guwahati
Reviewed on 30th Nov 2017
3 / 5 stars
ICICI Bank Car Loan Availed in Oct-18

Got over 9% interest which was okay. There was a delay in disbursalRead more...

Mohamed Yunus, Pondicherry
Reviewed on 22nd Nov 2017
5 / 5 stars
HDFC Bank Car Loan Availed in Nov 2017

Good and fast service, door step documents collection.Read more...

jagmal singh makwana, Banswara
Reviewed on 02nd Nov 2017
5 / 5 stars
HDFC Bank Car Loan Availed in Oct-17

HDFC Bank finance is good. I like good service and fast processing.Read more...

Car Loan News - Dec 2020
  • 2020-11-27 : DHFL posts net loss of ₹2,122.65 crore
    DHFL reported a consolidated net loss of ₹2,122.65 crores in the second quarter of the fiscal against a net loss of ₹6,640.62 crores in the same period a year ago. DHFL reported a total income of ₹2,205.90 crores backed by retail loans like home, personal, car, two-wheeler and gold loans along with mudra and business loan.
  • 2020-11-27 : ESAF Bank opens 500th branch in Ahmadabad
    ESAF Bank opens 500th branch in Ahmadabad. The bank is aiming to offers equal opportunity for the whole society through universal access. It offers retail loans like home, personal, car, two-wheeler and gold loans along with mudra and business loan.
  • 2020-11-26 : Credit growth slows to 5.8% in the September quarter
    RBI reported that the credit growth which includes retail loans like home, personal, gold, two-wheeler and car loan along with business and mudra loan decelerated to 5.8% in the September quarter from 8.9% in the year-ago period. Further, deposits which include FD and RD increased by11% year-on-year in the July-September period as compared to 10.1% growth a year ago. The share of current account and saving account (CASA) in total deposits stood at 42.3% in September 2020 compared to 41.2% a year ago.
  • 2020-11-11 : Bank credit increases by 5.06%, deposits rise by 10.12%
    RBI reported that Bank credit which includes retail loans like home, personal, gold, car, two-wheeler, education and gold loans along with business and mudra loans by grew by 5.06% to Rs 103.39 lakh crore. Deposits which include Fixed and recurring deposits rose by 10.12% to Rs 142.92 lakh crore in the fortnight ended October 23.
  • 2020-11-11 : SBI to focus on financial inclusion
    SBI is planning to increase the share of its newly created business vertical, financial inclusion and micro-markets from the current 12% to 20% by March 2022. The bank recently created a separate FI&MM vertical within the bank with an aim of financial inclusion of rural and semi-urban areas to improve customer experience in the hinterland.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More
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