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Car Loan
Getting a car is still a dream for many, and a car loan will help you fulfil your dream. The prices of new cars might keep your dreams in the back seat. But not anymore; with the growing market of cars, many banks and NBFCs provide car loans to prospective buyers. This way, it is more affordable for new car owners to get the desired car they want under their budget.
Start Your Journey
Compare Banks by their Interest Rates
| Bank Name | Interest Rate | Per Lac EMI | Processing Fees |
|---|---|---|---|
| Bank of Baroda | 8.50% to 15%.00 | 12 to 84 months | Up to 90% of the car price |
| Canara Bank | 8.95% onwards | 12 to 84 months | Up to 90% of the car price for a loan up to INR 25 Lakh Up to 80% for loan above INR 25 Lakh |
| Axis Bank | 8.45% to 13.05% | 12 to 84 months | Minimum INR 1 Lakh and a maximum of 100% of the on-road price. |
| Federal Bank | 10.40% onwards | 12 to 84 months | Up to 100% of the on-road price |
| SBI | 8.40% to 9.20% | 12 to 84 months | Up to 90% of the on-road price |
Documents Required for New Car Loan
You can apply for a new car loan with the following documents. Check out the list of documents below -
- Two passport-size photos of both the primary borrower and co-borrower
- Identity Proof – Voters ID, Driving License, Passport, PAN Card, Aadhaar Card
- Address Proof – Driving License, Aadhaar Card, Passport, Voters ID
- Age Proof – Birth Certificate, Driving License, SSLC/AISSE Certificate
- Additional documents for Non-Resident Indians – Certified copy of Passport, Visa, Work Permit, ID card
See the income proof you will need to apply for a Car Loan.
Salaried
- Latest Salary Slip (3 months)
- IT returns (2 years) or Form 16 (2 years)
- Latest six-month’s Bank Account statement evidencing the salary credits
For Self Employed
- Proof of Business Existence & Business Profile
- Last 12 months’ bank a/c statements
- IT returns for two years supported by Balance Sheet and Profit and Loss Account for the past two years. Where ever available, Tax paid challans may also be collected OR the Last two years IT returns supported by Tax calculation sheets & Tax paid challans.
For NRI Salaried
- NRE account statement for last year
- Embassy / CRO certified Salary Certificate/ latest three months salary slip supported by six months Salary Crediting Statement.
- Two years NRE a/c statement of the customer and/or resident accounts of spouse/parents (with us/ other Bank) in which remittance is made.
For NRI Self-employed
- Proof of Business Existence & Business Profile
- Last 12 months’ bank a/c statements
- Balance Sheet, P&L Account for the past two years. Where ever available, Tax paid challans may also be collected.
- Two years NRE a/c statement of the customer and/or resident accounts of spouse/parents in which remittance is made.
- Invoice
- Latest land tax receipt or own house proof (latest land/building tax receipt, Electricity Bill, Water bill etc.)
- Sale Letter & Valuation letter from authorized used car dealer /dealer in case of Used Car
- Property Documents (In case of loans over 25 Lakhs)
- 1. Documents of title 2. EC for 13 years 3. Possession certificate 4. Location sketch 5. Land tax receipt 6. Building tax receipt
Alternate Options for Car Finance
If the cost of a new car isn't in your budget, you can use a used car loan.
After the COVID-19 pandemic, the Indian market experienced a steep upsurge in the second-hand car market, where the prices of used cars also hiked up to 10%-15%. And those who are willing to purchase a second-hand car have taken a step back. A Used Car Loan is specially designed for buying second-hand cars. Since the purchasing process and requirements of new vehicles and second-hand cars differ, the same loan might not be the best choice.
A Used Car Loan covers all the basic needs of getting a second-hand car, starting from the down payment to insurance. The Used Car Loan eligibility might be the same, if not more lenient, than the new car loan eligibility. While new car loans are designed to meet all requirements of purchasing a new car, they might fail to serve when getting a second-hand car. Since these loans are adjusted for this specific reason, they are more convenient, reliable, and efficient. Generally, all car loans provide a specific percentage of the total car price. Since the second-hand car process is lower, you need this loan offer without going overboard.
The eligibility criteria for these loans differ from a new car loan. Since the loan amount for second-hand cars is lower than for new vehicles, the documentation process is much easier. While you will still have to submit documents like age proof, identity, address, and income proof, the overall verification and disbursal process takes less time, and you will be able to complete the purchase sooner.
When taking a loan, the main concern comes from the interest rate. Since car loans in India have pretty high-interest rates, it is better to opt for a loan with lower interest rates. Any second-hand car loan in India has lower interest rates because this rate largely depends on the loan amount and tenure. Since second-hand car loans are smaller and have shorter tenure, the applicable interest rate is also lower.
Term period or tenure refers to the period of loan repayment. Within this given time, the borrower must repay the amount via instalments along with the interest and the additional charges. Missing payments within this term can negatively impact your credit score. A Used Car Loan generally has a shorter term than a new car loan. Second-hand cars do not cost as much as new cars, and due to the amount being smaller, the second-hand car loan tenure is also lesser than others. Because a borrower has to pay interest during the entire term period, and when you can repay the loan within a short period, it costs you less. Many NBFCs and banks have a penalty on foreclosure because of this reason. With a second-hand car loan, you will not have to pay such charges or any extra interest.
Apart from being hassle-free alternatives for new car loans, there are also added benefits of using a Used Car Loan. While most car loans pay only a certain percentage of the car price, some second-hand car loans pay up to 100% of the cost. Not only that, but the verification, approval, and disbursal process also take less time. You can quickly check Used Car Loan eligibility at Muthoot Capital’s official website by providing basic information like the loan amount, your monthly income, and your ideal repayment tenure. These loans are quick, fast, and effective if you plan to get a second-hand car! Are you planning to get a vehicle? Two types of loans are available for you to finance a car. One is a new car, and another is a used car loan. The used car loans are specifically made for those not opting for a brand-new car for any reason. Most people settle for second-hand cars for various reasons. While cost might be the first factor, other factors might affect the decision to get a brand-new or a second-hand car, including fear of getting the car damaged.
Types of Loans Against Property
If the cost of a new car isn't in your budget, you can use a used car loan.
Many people want to get a new car. And if you want the car for driving practice, get a used car loan before getting a new one. In any case, you need a car loan to purchase a car.
You can borrow a new car loan to purchase a new car model. And can get a used car loan specially designed for second-hand car purchases. These loans might be the best fit for a car purchase. Generally, a car’s prices, down payment, insurance, and other aspects highly differ between new and old cars. Thus, when a loan is specially curated for that specific type of car, it covers all the necessities and helps you to get what you need.
The repayment terms of a new and used car loan also vary. The repayment term means the tenure by which you must complete the repayment of the entire loan amount. It is better to have a more extended repayment option since the longer it gets, the lesser the interest rates are. However, paying instalments for an extended period can cost you more. Since used car loans have a shorter tenure, it helps you repay the loan flexibly without much hassle.
Any new car would cost much more than a used one. Thus, getting a loan for a used car is the best option if you are doing the same. Loans tend to have heavy interest rates; thus, getting a huge loan when you don’t need it will only increase your financial burden. If you choose a loan for a used car, then the amount will be what you need to get a cheaper second-hand car. You can refrain from paying the interest rates when you do not need that much money.
Generally, the down payment amount varies between new and used cars. Since the used car prices are lower than new cars, the down payment amount might be higher. Since the new car loan disbursal process differs, you might struggle to pay the down payment. Loan provider that covers most of your down payment on specific car models. Although this offer is limited to only some models, you can still make the best by choosing a car model within that limit. Lending institutions offer lower interest rates to the borrower if they make high down payments. It will decrease the principal amount, the interest rate and the Equivalent Monthly Instalments (EMIs). This way, you get a head start on the loan approval.
The interest rates are also different for new and used car loans. The interest rate on new car loans is much higher than on used ones. While used car loans are available at as low as an 8.5% interest rate, new car loans can rate over 11%. There is no point in getting a loan with higher interest rates when you opt for a product with a perfect loan option. Used car loans can save a lot of your money.
In other words, getting a loan for a used car offers you more flexibility than other new car loans. These loans have easy documentation, quick disbursals, and lower interest rates. The tenure for such loans is shorter, allowing the borrower to pay comfortably without paying much interest. Second-hand cars are available at a great price all over India, and most of these cars are in excellent condition. So, if you dream of your car but there is a financial crunch, used car loans help you!
Most individuals find it good to buy a used car to improve their driving skills. Also, many of us consider affordability. Fortunately, used Car Loans are available against easy eligibility criteria with various financial institutions. A used Car Loan is the most convenient financing option to fund a car. These Car Loans can cover various cars, MUVs, SUVs, etc. You can buy a high-end used car for the same price as a new car with moderate features. It can finance specific models of cars with up to 95% of the Insurance Declared Value (IDV) of the car. The interest rate is one of the primary factors a buyer considers before deciding on a loan. Thankfully, used Car Loan interest rates are lower compared to unsecured loans.
A used Car Loan interest rate depends on various factors, like age, model, etc. The interest rate on a used Car Loan may be higher than that applicable on a New Car Loan. Let us explain the factors to consider before getting a Car Loan for a used car.
Your credit score is the biggest factor considered during the Car Loan application. It tells about your creditworthiness. A credit score of 700 and above shows your high creditworthiness to repay the loan. In contrast, a low score can increase your loan interest rate. That’s how it affects your car loan’s interest rate for used cars.
The debt-to-income ratio helps determine the borrower’s loan repayment capability. Therefore, loan providers must consider setting the Car Loan interest rate. A high debt-to-income ratio increases the chances of loan rejection. Otherwise, you will get a loan with a higher interest rate.
If you want the best Car Loan interest rate, consider the model and age of the car before finalizing. The loan provider will seize your car if you cannot pay timely EMIs. Therefore, it is crucial for lending institutions to check the age and model of the used car. Suppose the model you chose has been discontinued; the lender will levy a high-interest rate. There will be a low-interest rate on newer cars. If you select a car from a reputed manufacturer, the interest rate will also be low.
It would be best to approach the right lending institution to get an attractive interest rate on a Car Loan. Salaried and self-employed individuals can get a used Car Loan at a low-interest rate. With Muthoot Capital, you can experience simple and faster processing. Also, the repayment tenure is flexible. You can repay your used Car Loan in a convenient loan tenure as per your financial ease – between 12-84 months.
FAQs
If the cost of a new car isn't in your budget, you can use a used car loan.
Filling out a car loan application involves several steps:
Gather Necessary Information: Collect personal information like your full name, contact details, Social Security number, and employment details.
Provide Financial Details: Include your income, monthly expenses, and any existing debts or loans. This helps the lender assess your financial situation.
Choose a Loan Term: Decide on the length of the loan (e.g., 36 months, 60 months). Longer terms may have lower monthly payments but higher overall interest costs.
Select a Down Payment: Decide how much you’ll pay upfront. A larger down payment may lead to better loan terms.
Specify the Vehicle Details: Include information about the car you’re purchasing, such as make, model, year, and VIN.
The 25 lakh amount of a car loan you can get depends on several factors, including your creditworthiness, income, and the lender’s policies. Generally, lenders may approve a loan for the full cost of the car or a percentage of it, often up to 80-90% of the vehicle’s value. It’s important to note that a larger down payment can increase the amount you’re eligible for. To get an accurate estimate, it’s best to consult with lenders or use online calculators to assess your potential loan amount based on your specific financial situation. Keep in mind that taking on a loan that fits comfortably within your budget is crucial to ensure you can make timely payments.
Gather Loan Information: Collect all the relevant details, including the principal amount (the loan amount), the loan term (the number of months you’ll be repaying the loan), and the total amount to be repaid. Determine Monthly Payment: Use a loan calculator or the formula for monthly payments: less Copy code Monthly Payment = P × (r(1+r)^n) / ((1+r)^n – 1) Where: P = Principal loan amount r = Monthly interest rate (annual interest rate divided by 12 and expressed as a decimal) n = Total number of monthly payments Choose an Interest Rate: Start with an estimate for the interest rate. This can be based on the current market rates or the rate quoted by the lender. Iterate and Adjust: Plug in the estimated interest rate into the monthly payment formula and calculate the monthly payment. Compare this to the actual monthly payment quoted by the lender. If they don’t match, adjust the interest rate and recalculate until you get a close match. Consider Other Costs: Remember that the interest rate is just one part of the cost of the loan. Factor in any additional fees or charges imposed by the lender, such as origination fees or prepayment penalties, to get a more accurate picture of the overall cost.
The required CIBIL score for a car loan can vary depending on the lender and specific policies. Generally, a CIBIL score of 700 or above is considered good for securing a car loan at favorable terms. However, some lenders may be willing to work with scores as low as 600, albeit with potentially higher interest rates. It’s important to note that a higher credit score often leads to better loan terms and lower interest rates. Always check with individual lenders for their specific requirements as they may have varying criteria.
