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Car Loan

Car Loan Details

Last Updated 07th Mar 2021

  • 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 5 years to 7 years.
  • Avail refinancing car loan to get an auto loan at a lower interest rate.
  • News: Aadhaar Based Authentication for License Renewal New

A car loan is the perfect financial instrument to fulfil the dream of owning a car. Before applying, use Car Loan EMI Calculator to know about the EMI. This will also help you in managing your budget and avoid any extra financial burden.

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 7.65%. 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 7.65% Fixed 7 years 100% of ex-showroom price
SBI Car Loan Rates 7.50% Floating 7 years 85% of on-road price
ICICI Bank Car Loan Rates 7.90% Fixed 7 years 100% of ex-showroom price
Axis Bank Car Loan Rates 8.70% Fixed 7 years 100% of on-road price
IndusInd Bank Car Loan Rates 8.65% Fixed 5 years 85% of ex-showroom price
Kotak Bank 6.50% Fixed 5 years 90% of ex-showroom price
PNB 7.55% Floating 7 years 85% of on-road price
Union Bank of India 7.40% Floating 7 years 85% of on-road price
Central Bank of India 7.25% Floating 7 years 90% of on-road price
Andhra Bank 7.40% Fixed 7 years 85% of on-road price
IDBI Bank 9.20% Fixed 7 years 90% of ex-showroom price
Federal Bank 8.50% Fixed 7 years 90% of ex-showroom price
Bank of India 7.45% Floating 7 years 85% of on-road price
Bank of Maharashtra 7.55% Floating 7 years 90% of on-road price
Corporation Bank 7.40% Floating 7 years 85% of ex-showroom price
Indian Bank 9.65% Floating 7 years 85% of on-road price
OBC 7.55% Floating 7 years 85% of on-road price
Bank of Baroda 7.25% Floating 7 years 90% of on-road price
United Bank of India 7.55% 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 5 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 85% 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 6.50% to 20.00%.

Car Loan Approval - Steps for Faster Loan Approval

The best way to arrange funds while planning to purchase a new or old car is a pre-approved loan. Follow these steps to get quick loan approval.

Credit Report

Borrowers must regularly check their credit report for credit scores. A 750+ score will help you in getting lower interest rates. Lower the score, higher the interest rates offered, or the application is rejected.

On-time Bill Payment

To get a car loan, borrowers must have a minimum monthly pre-tax income and a reasonable debt-to-income ratio. Increasing income takes time; hence, applicants can take steps to improve their debt-to-income ratio.

  • Should always pay bills on time.
  • If paying regularly is not possible, then at least start paying bills regularly six months before applying for a car loan.

Shop for Different Loan Products

Loan market offers multiple options for buying new or old cars. Before finalising, compare car loan interest rates offered by banks and NBFCs as per the requirement.

Borrow as Less as Possible

Try to make the down payment as the maximum you can. A sizable down payment will decrease the loan amount, which will ensure less burden and hence, you pay less interest, low EMIs, short loan term.

Select a Plan That Fits the Budget

Applicant’s repayment capability also determines the loan approval chances. While planning to get a car loan, borrowers must ensure that they can afford the extra burden of EMIs on their monthly income.

Read the Fine Print (Terms & Conditions)

A car loan with low EMIs and long term is not a good option; Applicants must choose a scheme that offers low-interest rates and shortest duration possible.

Get a Car Insurance with Complete Coverage

The banks and NBFCs are primarily worried about losses they may face when providing a loan. For certain companies, full coverage insurance is a prerequisite before a car loan is sanctioned as this allows to reclaim the balance debt when the borrower is at fault in an accident.

Foreclosing a Car Loan

Car loan borrowers have to repay the loan amount in easy EMIs till the end. So, if the borrowers decide to pay the outstanding dues at once, that means they are foreclosing the loan which is better and different from settling. Lenders may or may not charge the foreclosure fees from the borrowers.

Borrowers should foreclose their car loan if they have received a raise or increment and don’t want to pay monthly EMIs of the loan. Foreclosure of the car loan will give the full ownership. So before choosing a lender, ensure that the lending bank doesn’t have any foreclosure charges.

Top-Up Loan on Your Car Loan

Financial needs can arrive anytime. After availing the car loan, borrowers may come across emergencies such as marriage, medical issues, etc. To address this issue, borrowers can ask for a top-up on the existing car loan. Lenders offer 150% of the car's value as a top-up amount. Must have a clean nine months payment history. HDFC, Axis, ICICI Bank are some of the primary lenders offering top-up on car loan services.

Income Tax Benefits on Car Loans on Electric Car(EV)

In the latest union budget, the government made provisions to stimulate environmental friendly commuting solutions.

  • Borrowers can enjoy tax exemption of ₹ 1.50 Lakh on the interest if they take a car loan to buy an electric vehicle(EV).
  • In case of purchase of an electric vehicle(EV), borrowers can avail a benefit of about ₹ 2.50 Lakh during the entire loan tenure.
  • The government has also cut the tax rates from 5% to 12% on EVs.

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.

Latest news about services related to DL

  • Now avail services related to your license online

    The Ministry of Road, Transport and Highways announced that you can now avail all the essential services related to your driving license online. Below-mentioned is essential services that you can avail yourself of through Aadhaar authentication.

    • Learner’s licence
    • Renewal of driving licence
    • Duplicate driving licence
    • Change of address in driving licence and Certificate of Registration
    • Issuing of an international driving permit
    • Surrender of class of vehicle from licence
    • Application for temporary vehicle registration
    • Application for registration of motor vehicle with a fully-built body.

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 5 years to 7 years.

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...

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Car Loan News - Mar 2021
  • 2021-03-05 : Axis Bank launches WhatsApp banking
    Axis Bank launched banking services on WhatsApp. The new facility will enable its retail customers to seek information regarding their account balance, recent transactions, credit card payments, fixed and recurring deposit details, besides getting their queries answered in real-time.
  • 2021-03-04 : 10 lakh customers of other bank are using ICICI’s banking app, iMobile Pay
    ICICI Bank reported that 10 lakh customers of other banks have started using its app, ‘iMobile Pay’. The Bank has achieved the feat in three months after it made the app open for all to use, including those not its customers. The bank anticipates that the number is likely to double in two months.
  • 2021-03-02 : Banks credit rose by 6.58% and deposits by 11.75%
    Reserve Bank of India reported that the Bank credit which involves home, personal, LAP, two-wheeler, gold and education loans along with business and mudra loans grew by 6.58% to Rs 107.04 lakh crore in the fortnight ended February 12. Further, deposits which include FDs and RDs increased by 11.75% to Rs 147.81 lakh crore.
  • 2021-02-26 : IRDAI gives approval for Axis Entities-Max Life Insurance deal
    The Insurance Regulatory and Development Authority of India has given its approval to acquire up to 12% stake in Max Life Insurance by Axis Bank and its subsidiaries, Axis Capital and Axis Securities. The IRDAI approval was an important venture transaction that was first announced in April 2020
  • 2021-02-26 : IndusInd Bank to grow loan book by 15-18%
    IndusInd Bank is expecting to grow its loan portfolio by 15-18% year-on-year for the next two financial years under its fifth planning cycle.The Bank’s year-on-year growth in advances which include home, personal, LAP, two-wheeler car and gold loan along with business and mudra loan was flat at Rs 2.07 trillion until December 2020. Its deposits which include fixed and recurring deposits, grew by 10% to Rs 2.39 trillion.
*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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