How to Apply for a Car Loan and Car Loan Eligibility in India

Posted in: Bank Loan | on: October 13, 2017

Car loan summary with detailed notes of interest rate, down payment, hypothecation, NBFCs, captive lenders, insurers benefit and importance with tabulation for better understanding
How to Apply for a Car Loan and Car Loan Eligibility in India

Car lovers are everywhere and many have passion to own a car. It is one of the comfortable medium for travel.

How Important To Own A Car?

Owning a car not only gives happiness but also it is helpful in many ways. Travelling becomes easy with car. It is more convenient than any other mode of travel. It provides safety and enables quick transportation.

Interest Rate

Buying a car is very simple, as one can opt for loan from a known financial institution. At a particular interest rate, loan will be credited at some percent of the total value of the car. The interest rate is nothing but a small percentage of amount raised monthly or annually by a financial institution (example - Banks) against a loan. This interest rate usually varies between the financial institutions. The interest rate depends upon the loan amount. To avail loan or other lending process, knowing the rate of interest is important.

Down Payment

Down payment is the part of money from the whole amount given initially during the purchase of particular items. The balance amount will be settled later by loan or by cash. It lowers the interest amount. If a person pays the down payment during the purchase of car, then desired to settle the balance by loan, it decreases the interest amount of loan. Hence, the monthly instalment amount is also reduced.

Hypothecation

Hypothecation means giving a property or asset to the lender by a borrower as a security of the loan for the lender. The property after the hypothecation is in the name of the lender. In case of non-repayment of the loan by the borrower, the lender has a right to sell the property to get the amount he gave. This hypothecation is done through law or officially. Usually, hypothecation is done to minimize the risk taken by the lender.

NBFCs

NBFC is the short form of Non-Banking Financial Company. It is not a bank and have different businesses like insurance business, chit business, leasing, involved in acquiring the shares, stocks, etc. Usually a NBFC collect small instalments, makes it a huge amount and settle it. All the NBFCs are registered with RBI and act under the guidelines of RBI. For a new registration, a NBFC should satisfy the terms of RBI. There are different types of NBFCs. They are,

AFC- Asset Finance Company

IC - Investment Company

LC - Loan Companies

IFC - Infrastructure Finance Company

CIC- SC- ND - Systemically Important Core Investment Company

IDF- Infrastructure Debt Fund

MFI - Micro Finance Institutions

Captive Lenders

Captive lender is the subsidiary of a large company said as the parental company. The captive lender is used to finance the customers of the parental firm. We can see a finance institution in the name of a largest manufacturer. That financial institution performs the lending services for the manufacturing company thus easing the process of loan and other things during a purchase of items from the big company. Also, they do insurance businesses for the same. In the case of buying car, most car companies have their own captive business to benefit more. For the customers, one of the benefits of approaching the captive lenders could be the possibility to minimize the interest rate. These companies do a range of businesses from inside to banking.Banks are the renowned financial institution chosen by all mostly. It is a place to save money in the form of deposits with interest. Most helpfully, one can raise different types of loans like housing loan, car loan, personal loan and loan against jewels. They help to transfer and receive money from one to one. All the banks run under RBI, which is the head of all banks. There are private sector and public sector banks.

BANK NAME INTEREST RATE LOAN AMOUNT TENURE (in years) PROCESSING FEE LTV RATIO ELIGIBILITY
ICICI Bank

1)8–16.20% for new cars

2)10.25–18.51% for used cars

It is 100% the cost of the car 1 - 7 It is 2% of the loan amount

1)it is 100% of ex-showroom price for new cars

2)it is 80% of the value for the used cars

1)Salaried persons

2)Self-employed professionals

3)Self-employed non-professionals

AXIS Bank 11–12% From 1 lakh – 85% of the value of the car 1 – 7 From Rs.3500 – Rs.5500 It is 95% of ex-showroom price of the desired model

1)Self-employed persons

2)Proprietorships

3)Partnership companies

4)Limited Liability Partnership companies

YES Bank 10.25–12.25% From 1 lakh – 500 lakhs 1 – 7 From Rs.5000 – Rs.10000 It is 90% of ex-showroom price of the desired model

1)Salaried person

2)Partnership companies

3)Private companies

HDFC Bank 10–14.95% Up to 1.5 crore 1 – 7 From Rs.3000 – Rs.6000 depends on loan amount It is 85% of ex-showroom price of the desired model

1)Salaried person (Govt employee, employees of private companies)

2)Self-employed person

3)Self-employed (in partnership)

4)Self Employed persons (Private companies)

5)Self-employed (Public companies)

SBI Bank Varies from 9–12% depending on the car loan scheme Depends on the net income of the applicant 1-7

1)Rs.450 for new cars

2)Rs.9100 for used cars

It is 85% of ex-showroom price of the desired model

1)Salaried persons

2)Professionals

3)Businessmen

4)Partnership company

SUNDARAM FINANCE Varies from 9–12% depending on the car loan scheme

1)For new cars – up to 95% of the car price

2)For used cars – up to 60% of the value of the car

1 – 5 Rs.2500 It is 85% of ex-showroom price of the desired model

1)Salaried persons

2)Professional persons

3)Business persons

4)Proprietorship Company

5)Partnership Company

6)Private/Public Limited Company

TVS CREDIT SERVICES 13–14% Up to 15 months gross salary of the applicant Up to 48 months It is 0.5% of the loan amount It is 80 – 90% of ex-showroom price of the desired model

1)Salaried persons

2)Professional persons

3)Business persons

4)Proprietorship Company

5)Partnership Company

6)Private/Public Limited Company

TVS CREDIT SERVICES Floating rate of interest Up to 30 months gross salary of the applicant 1-7 It is 0.5% of the loan amount It is 85% of ex-showroom price of the desired model  

 

Apply Car Loan in State Bank of India

Documents Required: For salaried person, the required documents are, age proof and ID proof, filled application form, recent photograph of the applicant, documents of residence proof, income proof, bank statements and proof for signature. For businessman & professional, documents for age proof and ID proof, Filled application form, recent photograph of the applicant, documents of residence proof,income proof, bank statements, ITR for last 2 years and Audit balance sheet. For agriculturists, documents for age proof and ID proof, filled application form, recent photograph of the applicant, documents of residence proof and direct agricultural activity and allied agricultural activity.

Eligibility Criteria: Loans available for Salaried persons, Professional persons, Business persons and Partnership Company.

Fees & Charges

Processing Fee: Processing fee is between Rs.450 & Rs.9100 for pre owned car and no fee for new car.

Foreclosure Fee: No foreclosure fee.

Loan to Value Ratio: 85% on road value will be given.

Interest Rate: Depending on the type of scheme, interest rate varies. Interest rate for SBI Car Loan Scheme is 9.25% per annum for men applicant and 9.20% per annum for women applicant. Interest rate for SBI Combo Loan Scheme is 9.25% per annum for men applicant and 9.20% per annum for women applicant. Interest rate for NRI Car Loan is 9.25% per annum for men applicant and 9.20% per annum for women applicant. Interest rate for Certified Pre-owned car loan is 12.65% per annum.

SBI Assured Car Loan Scheme: It is 9.25% per annum for men applicant and 9.20% per annum for women applicant.

Loan Amount: Depending on the salary of the applicant, loan amount is fixed. Persons having net income above Rs.2,50,000 will have the loan amount about 48 times the net monthly income for salaried persons, net profit above Rs.4,00,000 will have the loan amount about 4 times the net profit for businessmen, partnership firms and persons with net minimum income Rs.4,00,000 will have the loan amount about 3 times the net income for agriculturists.

Tenure: Up to 7 years.

Apply Car Loan in ICICI Bank

It is one of the leading private sector banks. ICICI is the short form of Industrial Credit and Investment Corporation of India. It has flexible car loans depending on the customer needs.

Documents Required: For salaried persons, the required documents are, photograph, application form, identity proof, age proof, address proof, bank statement, signature proof, income proof, latest salary slip and employment proof. For self-employed professionals, the required documents are, photograph, application form, identity proof, age proof, address proof, bank statement, signature proof, ITR for last 2 years, business proof and Income proof. For self-employed non-professionals, the required documents are, application form, identity proof, age proof, address proof, bank statement, signature proof, business proof, ownership proof and partners letter with signature authorizing one partner.

Eligibility Criteria: Salaried persons, self-employed professionals and self-employed non-professionals are eligible to apply loan in ICICI bank.

Fees & Charges

Processing Fee: Processing fees for used car loan is 2% of the loan amount or Rs.6000. Processing fees for new car is depending on the loan amount. For loans less than Rs.2.5 lakhs - Rs.2500, loans between Rs.2.5 - 3.9 lakhs - Rs.3500, loans between Rs.4 - 4.9 lakhs - Rs.4000, loans between Rs.5- 9.9 lakhs - Rs.4200, loans above Rs.10 lakhs - Rs.5000. Documentation charge is Rs.250.

Part Payment Option: Part pre-payment is not permitted up to 6 months. For 7 to 12 months - 6% of loan amount, for 13 to 24 months-3.5% of loan amount, above 24 months - 3% of loan amount is permitted. The minimum amount that can be partly prepaid must be equal to one EMI and the maximum amount must be 25% of the outstanding principal amount. It is allowed only two times during the loan tenure and only one time during a year.

Loan to Value Ratio: Loan is given up to 100% of the ex-showroom price of the car. In the case of pre-owned cars, 80 % of the value of the car will be given.

Interest Rate: There is fixed Interest rate. It varies from 12.75% interest up to 23 months, 12.25% interest between 23 - 35 months and 10.75% interest between 36 - 85 months. And in case of used car loans, it is 15.50% for all months. And the actual range of Interest rate for new cars 8% - 16.20%, for used cars 10.25% - 18.51%.

Loan Amount: Loan amount is up to 100 % of the cost of the car.

Tenure: Tenure is from 1 to 7 years for new cars and up to 5 years for the pre-owned cars.

Apply Car Loan in HDFC Bank

It is also one of the best private sector banks. HDFC is the short form of Housing Development Finance Corporation.

Documents Required: For salaried employee and self-employed persons (own business), the required documents are, copy of identity and address proof, PAN card, aadhaar card, voter ID card, driving license, passport, ration card, electricity or telephone bill, income proof - last 6 months bank statement, latest salary slip is needed for salaried person and later ITR is needed for self-employed person. For self-employed (In partnership), self-employed persons (Private companies), self-employed (Public companies), no proof of identity is required and for income proof - Profit and loss sheet of past two years, audited balance sheets and bank statement of last six months are required.

Eligibility Criteria: Depending on the type of work of a person, car loans are available to them. Minimum age limit for car loan is 21 to 60 years. It is same for all the below said categories. For salaried person (Govt employee, employees of private companies), the minimum annual income isRs.1,80,000. It includes the income of the co-applicant. Minimum working period is 1 year. The person should have a telephone connection or post-paid connection. For self-employed person, the minimum annual income is Rs.60,000 (For standard cars) and Rs.1,00,000 (For medium sized cars). Minimum time of the business is 2 years. The person should have a telephone connection or post-paid connection. For self-employed (in partnership), the minimum annual income is Rs.60,000 (For standard cars) and Rs.1,50,000 ( For other cars). The minimum required annual turnover should be Rs.4,50,000. The person should have a telephone connection or post-paid connection. For self-employed persons (Private companies), the minimum annual income is Rs.60,000 (For standard cars) and Rs.1,50,000 (For medium sized and premium cars). Minimum annual turnover should be Rs.4,50,000. Landline phone connection is needed. For self-employed (Public companies), the minimum annual income is Rs.60,000 (For standard cars) and Rs.1,50,000 (For medium sized and premium cars). The minimum annual turnover should be Rs.4,50,000. Landline phone connection is needed.

Fees & Charges

Charge of NOC is Rs.2250 and other charges are from Rs.50 to Rs.500.

Processing Fee: Processing fee of loan amount up to 2.5 lakhs is Rs.3220. From Rs.2.51 lakhs up to 4 lakhs is Rs.4390. From Rs.4.01 lakhs to 5 lakhs is Rs.4900. From Rs.5.01 lakhs up to 10 lakhs is Rs.5300. And above Rs.10 lakhs is Rs.5870.

Foreclosure Fee: There is no foreclosure allowed within 6 months from date of the car loan and 6% of outstanding principal for pre closures within 1 year from the seventh EMI. There is 5% of outstanding Principal for pre closures within 13-24 months from the first EMI and 3% of outstanding Principal for pre-closures after 24 months from the first EMI.

Part Payment Option: Part-payment is available only after the completion of 12 months that after the 12 EMIs. One can avail part payment only two times during the loan tenure and it is allowed only one time a year. Part payment will not increase beyond 25% of the outstanding principal. 5% on the part payment amount if the part payment is about to prepaid within 13-24 months from the first EMI. 3% on the part payment amount if the part payment is about to paid after 24 months from first EMI.

Guarantor Requirement: There is no guarantor required.

Loan to Value Ratio: Maximum - 85% of the ex-showroom price of desired car model.

Interest Rate: Car loan interest rate varies between 10% & 14.95%.

Loan Amount: Loan amount is extended up to 1.5 crore.

Tenure: Tenure is from 1 - 7 years.

Apply Car Loan in Axis Bank

Documents Required: Documents for age proof and ID proof, filled application form, recent photograph of the applicant, documents of residence proof and income proof, bank statements, proof for signature verification are required.

Eligibility Criteria: Car loans are eligible for, self-employed persons, proprietorships, partnership companies, Limited Liability Partnership companies.

Fees & Charges

Processing Fee: The processing fee required is Rs.3500 to Rs.5500 only (GST inclusive) Fees and charges are subjected to the terms and conditions of the bank.

Pre Closure Fee: It is 5% of the outstanding principal including GST.

Part Payment Option; There exists 5% of the part payment amount including GST. The minimum will be equal to the amount of single EMI and the maximum will be 25% of the balance amount.

Guarantor Requirement: Guarantor not required.

Loan to Value Ratio: Maximum - 95% of the ex-showroom price of desired car model.

Interest Rate: Interest rates are between 11% -12%.

Loan Amount: Minimum loan amount is Rs.1,00,000 and to the maximum of 85% of the value.

Tenure: Tenure is from 1 to 7 years.

Apply Car Loan in Yes Bank

Documents Required: Required documents are application form, photograph, identity proof, age proof, residence proof and last 6 months bank statement. For salaried person, last 3 months salary slip, income tax returns. For self-employed person, last 3 years income tax returns and last 3 years audited balance sheet and profit &loss account.

Eligibility Criteria: For salaried person, minimum age - 21 years and maximum age - 58 years minimum annual income is Rs.3 lakhs. For self-employed person, the maximum age - 65 years and the minimum annual income is Rs.2 lakhs. Minimum work experience should be 2 years. For partnership firms, the minimum annual income is Rs.2 lakhs. Minimum experience should be 2 years. For private company, the minimum annual income is Rs.2 lakhs and the minimum experience is 2 years.

Fees & Charges

Processing Fee: Processing fees is between Rs.5000 - Rs.1000.

Foreclosure Fee: It is 6% of outstanding principal from 6 to 24 months from the 1st EMI & 5% thereafter.

Part Payment Option: It is allowed after 12 EMI from 20% to 25% depending on the outstanding months.

Guarantor Requirement: Not required.

Loan to Value Ratio: It is 90% of the ex-showroom price of the car.

Interest Rate: Varies between 10.25% & 12.25%.

Loan Amount: From Rs.1,00,000 to Rs.500 lakhs.

Tenure: 1 – 7 years.

Apply Car Loan In TVS Credit Services

Documents Required: Identity proof, Residence Proof, Age proof, RC book and MOA and MAA.

Eligibility Criteria: Car loans are eligible for, salaried persons, professional persons, business persons, proprietorship company, partnership company and private/public limited company.

Fees & Charges

Processing Fee: Processing fees is 0.5%.

Pre-closure Fee: It is 3% of the outstanding loan amount if remaining EMI is 12 months, 4% of the outstanding loan amount if remaining EMI is 24 months, 5% of the outstanding loan amount if remaining EMI is more than 24 months.

Guarantor Requirement: Not required.

Loan to Value Ratio: It is 80% - 90% of the ex-showroom price of the car.

Interest Rate: It varies between 13% and 15%.

Loan Amount: Loan amount is 15 months Gross salary of the person.

Tenure: Tenure is up to 48 months.

Apply Car Loan in Oriental Bank of Commerce

Documents Required: For new car, application form, photograph of applicant and co-applicant & guarantor, identity proof, residence proof, age proof, and income proof are required. For salaried persons, salary certificate or income tax return is needed. For agriculturist, land holding record and any proof of income is needed. For all other persons, last 3 years income tax return, bank statement, quotation from authorized dealer and proof of income of spouse is needed if it is used for determining loan amount. For used car, application form, photograph of applicant and co-applicant & guarantor, identity proof, residence proof, age proof, income proof, vehicle details and registration certificate copy of vehicle, agreement of selling the car from seller and purchaser, prescribed transfer form, copy of receipt of road tax and other taxes is needed. Latest quotation from the authorized dealer is needed.

Eligibility Criteria: Eligible for, salaried individuals, professionals (including doctors), business entities (minimum 2 years the business should be running), agriculturist, non-resident Indians in hand with resident Indians.

Fees & Charges

Processing Fee: It is 0.5% of the loan amount.

Pre Closure Fee: There is no pre closure fee.

Guarantor Requirement: Guarantor Required

Loan to Value Ratio: It is 85% of the ex-showroom price of the car.

Interest Rate: It is a floating rate of interest. Up to 36 months, interest rate is 10.20% and up to 84 months, the interest rate is 10.45%. For second hand cars, up to 60 months, the interest rate is 12.70%.

Loan Amount: Maximum loan amount is equal to 30 month salary of the person subtracting all the deductions.

Tenure: It is 1 – 7 years.

Apply Car Loan in Sundaram Finance

Documents Required: For salaried and professional persons needed documents are, identity proof, address proof, income proof, asset proof, signature proof, photograph, last 6 months bank statement. For partnership companies, asset proof, income proof, last 2 years ITR, audit report, bank statement, photograph are required. For private or public companies, Memorandum of Association and Articles of Association is needed.

Eligibility Criteria: Car loans are eligible for salaried persons, professional persons, business persons, proprietorship company, partnership company and private/public limited company.

Fees & Charges

Processing Fee: Process fee is Rs.2500.

Pre Closure Fee: It is 3% of the outstanding loan amount.

Guarantor Requirement: Guarantor is not required for this loan.

Loan to Value Ratio: It is 85% of the ex-showroom price of the car.

Interest Rate: It varies from 9.5% - 11%.

Loan Amount: For new cars, it is up to 95% of the car price. And for used cars, it is up to 60% of the car value.

Tenure: 1 – 5 years.


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