What is a Car Loan?
A car loan is an advance given by banks or financial institutions to assist one in buying a car. The car itself is kept as collateral until the loan amount is completely repaid. If you know about home lona here is the link 🔗.Apply for easy car loan online in india read below paragraph!
Major Features of Car Loans in India
Car Loan Amount:
Up to 90%-100% of the on-road price of the car, depending upon the lender.
Some banks also fund used cars, generally up to 70%-85% of its value.
Car Loan Tenure:
Usually ranges from 1 to 7 years. A longer tenure decreases the monthly EMI but increases the interest cost.
Interest Rates:
Vary between 8.50% to 14.00% for new cars.A little high for used cars, ranging between 12% to 16%.
Processing Fee:
Usual 0.5% to 2% of the loan amount or a fixed amount. Some lenders waive it during the special offer.
Repayment Options:
Monthly EMIs (Equated Monthly Installments).
Prepayment is possible but may attract a penalty.
Eligibility Criteria
For Salaried Employees:
Age: Between 21 to 60 years.
Income: ₹2.5 lakh p.a. – varies with lender.
Employment: at least 1-year working experience
For Self-Employed Individuals
Age: 21-65 Years
Income: ₹3 lakh p.a. approx
Business vintage: at least 2 years
Credit Score:
700+ and your chances of getting sanctioned rise, so do your rates of interest.
Documents
PAN Card, Aadhaar, Passport, Voter ID for identification purpose
Utility bills, rent agreement, or an Aadhaar to prove your residency
Salary slips, ITR or bank statements to prove income.
Quotation/invoice by the dealer for vehicle.
Other Documents: Passport-sized photographs, signature verification.
Types of Car Loans
New Car Loan:
For purchasing brand-new vehicles.Offers higher loan amounts and competitive interest rates.
Used Car Loan:
For pre-owned vehicles.Loan-to-value ratio and tenure are lower than for new cars.
Balloon Payment Loan:
Lower EMIs throughout the tenure, with a large final payment.
Lease Financing:
Suitable for businesses, offering tax benefits and flexible terms.
How to Apply for a Car Loan?
Research and compare lenders based on interest rates, fees, and terms.
Check your eligibility and documents.
Submit an online or offline application with necessary details.
Loan approval and disbursement (usually within 2-3 days for eligible applicants).
Tips to Choose the Best Car Loan
Compare interest rates and processing fees across lenders.
Choose shorter tenure if possible to save on interest.
Maintain a good credit score for better terms.
Use a car loan EMI calculator to calculate affordability.
Best Car Loans in India (2024)
SBI Car Loan
Interest Rate: 8.75%-9.50% p.a.Tenure: Up to 7 years.
HDFC Bank Car Loan
Interest Rate: 8.90%-10.50% p.a.Features: Pre-approved offers for existing customers.
ICICI Bank Car Loan
Interest Rate: 8.90%-12.75% p.a.Flexible repayment options.
Axis Bank Car Loan
Interest Rate: 9%-11.50% p.a.
Tenure: Up to 8 years for select customers.
NBFCs (e.g., Tata Capital, Mahindra Finance)
Flexible eligibility, best for old cars or low-income customers.
Conclusion
Car loans have made car ownership more affordable. But responsible borrowing is important. Compare options, check the total cost of ownership, and ensure that EMIs fit your pocket.
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