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Get car loans that are best matched to your credit profile
Everyone must have dreamed about owning a car since our childhood. Movies and games have kindled that interest in cars for many of us. A car could be used for many purposes – going on a family trip, going on a long trip with friends, saving you from the rain or the hot sun when commuting to office or for those car lovers who would like to take the car for a drive just as a stress reliever. A single car could mean different things to different people. India is also a growing market for automobiles, the passenger car market has showed growth double digit growth over the years. The growth is seen across car categories which include compact car, sedan and utility leading to the breaking of a long-held belief that India is an economic and small car market place. International car manufacturers have also made their presence felt by creating cars for the Indian soil.
From a period, where owning a car itself was difficult, we have moved to what type of car and brand should we choose. Not everyone can choose the car they want and pay in a single check. This is where a car loan from banks can help you.
On discovering that many people are interested in buying a car for either comfort, safety or any other reason will not be able to buy their dream car on their own. They should either go for a car that they don’t want because it is cheaper or wait and save to buy the car which will take time and the car model might change.
Banks provide funding for the purchase of all kinds of cars. The borrower can pay back the lender through equated monthly instalments or EMI(s). Banks and NBFCs believe in providing car loans to the right applicants and thereby helping them purchase a car which is also cost-effective.
The borrower must have following eligibility criteria to get car loans for the purchase of new and used cars.
Loan Amount: Different banks have different criteria in determining the loan amount. Some banks do provide 100% of financing to purchase a new vehicle and some lenders provide less than that.
Tenure: The repayment period could range between 12 months to 84 months.
Margin: For purchase of new cars, the minimum margin starts from 10% and for old vehicles, it starts from 25%.
The interest rate is fixed at the sole discretion of the banks. Generally, it starts from 8.99% onwards and it can go up to 14%.
Processing fees may vary from bank to bank and some lenders do not charge anything as processing fee.
Pre-Owned Car Loans
Many banks provide loans for pre-owned cars for up to 85% of the car value or in some cases insurance value. Insurance value is nothing but the value at which your car is insured for. There are some banks who do provide 100% finance for used cars but 70% to 85% is the norm.
The interest rate will be similar to the rate offered for new cars or slightly higher ranging between 0.05% to 2%. The processing fee also varies from bank to bank and is based on the bank policy.
The tenure for the used car loan will be lesser than that of the tenure for new car loans. The norm for new car loans is 7 years with it being a maximum of 5 years for used car loans.
All the other charges that come with a loan are similar to that of a new car loan.
The following are the documents required to apply for a car loan
The following documents are further required in case of pre-owned cars loans
The car loan approval & verification process is simple and much quicker when you apply with a bank where you have an account. You can also apply online and get pre-approved offers on car loans with attractive interest rates. The loan amount is directly credited to their account instantly.
The application process is different if you apply with a bank where you do not maintain an account. You need to either apply online or directly download the application form from the official website or visit the nearest branch. You can also call the Bank’s car loan customer care to proceed with the application process.
Generally, a representative from the bank will come to your place of work or your home to collect the filled in application form and all the necessary documents required for verification at the specified time. A background check would help the lender know about the personal, professional standing of the applicant. If there are any discrepancies with the information provided, the car loan application is likely to be denied. After passing through document verification and eligibility criteria, the approval process moves to the final level. At the final stage and after negotiations, the car loan interest rate and tenure are fixed and sent for your acknowledgement.
In case your car loan application was rejected, you will receive a loan rejection letter which will receive a status update on the car loan rejection. Let us now see what the eligibility or qualifying criteria are as they are called in banking parlance for a car loan.
Before a person applies for a car loan, it is best to do an eligibility check which will be available on the lender’s website and at CreditMantri.com This way your credit score will not be affected as the bank will only soft pull your credit score and compares with other internal criteria to make sure you are eligible.
Customers can use the car loan EMI calculator to know how much EMI they will be paying each month. Customer can make use of the CreditMantri Car Loan EMI calculator or the lender’s Car Loan EMI calculator.
The importance of this is that customers will know how much EMI they will have to pay based on their loan requirement. This helps them to plan far ahead.
CreditMantri’ s Car Loan EMI Calculator and the lender’s Car Loan Calculator are among the best and probably the easiest ways to compare various car loan offers and choose the loan best suited to your requirements. Using the Car Loan EMI Calculator, you get a simple and quick way to accurately compare the various loans and determine what your EMI will be with the different lenders.
Your car loan can be repaid in following three ways.
Standing Instruction (SI): If you are an existing account holder with the lender, Standing Instruction is the best mode of repayment. Your EMI amount will be debited automatically at the end of the monthly cycle from the lender’s account you specify.
Electronic Clearing Service (ECS): This mode can be used if you have taken the car loan where you do not have an account and would like your EMIs to be debited automatically at the end of the monthly cycle from this account.
Post-Dated Cheques (PDCs): You can submit post-dated EMI cheques from your bank account at your nearest Banks Loan Centre. A fresh set of PDCs will have to be submitted in a timely manner. Please note Post Dated Cheques will be collected at non-ECS locations only.
It is recommended that you opt for either the SI or ECS mode of payment for faster and less prone to error than the use of PDCs.
1. What is maximum loan amount given to purchase a car?
The maximum loan amount varies from bank to bank. Some lenders provide up to 100% of financing for the purchase of a car.
2. What is the maximum tenure for a car loan?
The maximum loan tenure is up to 84 months.
3. What type of cars do banks provide car loans for?
Banks offer auto loans for most passenger cars, multi-utility vehicles and sports-utility vehicles that are available in India and are bought for personal use.
4. Do I have to provide any security to avail a car loan?
Car loan is a form of secured loan where your car will act as a collateral.
5. Can I sell my vehicle before I repay the entire car loan taken from a bank?
You cannot enter a transaction with any seller without a 'No Objection Certificate' (NOC) from the lender. The NOC can only be obtained after foreclosure or after you have paid off your loan.
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