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Car finance is an arrangement where the borrower avails funds from the financial institution to buy their dream car. The funds so borrowed will be paid back to the financial institution in equated monthly installments. The EMI would have both principal and interest paid by the borrower to the financial institutions. The period for EMI would be pre-determined, the minimum tenure would typically be 2 years and maximum to the extent of 7 years. The tenure, quantum of loan would determine the interest rate.
IDBI Bank provides competent interest rates on car loans based on your eligibility criteria. The credit score of the individual and the credibility of the individual would determine the disbursement and sanction of the loan.
About IDBI Bank Car Loan Eligibility
There are many key benefits that can be derived from availing a car loan from IDBI Bank, some of the key benefits are as mentioned below -
IDBI Bank offers Auto loans for both salaried and self-employed professionals at attractive interest rates. It has some very basic criteria for extending car loan, the eligibility criteria are as mentioned below –
These factors affect the eligibility criteria for availing car loan from IDBI Bank –
Credibility – Credibility of the applicant is established using the credit score. Higher the credit score, better is the position of the applicant to negotiate a favorable interest rate. Typically, banks lend to individuals with a minimum of 600 credit score and a score above 750 is considered a decent score. Applicant with low credit score runs the risk of loan application rejection which could potentially lead to lower credit score.
Age factor – This is one of the basic criteria for eligibility of car loan. Loan is extended to individuals in the age range of 18 – 70 years. A younger applicant will be able to elongate the loan tenure, thereby reducing the EMI outlay on a monthly basis. This potentially reduces the possibility of default and consequently the risk for the bank.
Income level – The income level is another critical factor. Higher income level potentially increases the chances of favorable terms. The bank perceives higher income level as a sign for reduced risk of default.
Existing debt – If the existing debt is high, then the repayment ability of the applicant becomes lower. Thus, reducing the credit score as well. While this aspect reflects in the credit score, it may still be considered as an individual element to assess the repayment capacity of the applicant.
Stability of income - The bank expects continued employment in the case of salaried applicant and continued business income or income in the case of self-employed business person or professional. The better the visibility of income (longer tenure of earnings) increases the chances of loan sanction from IDBI Bank.
An applicant who has a low credit score can use these techniques to improve chances of car loan eligibility. The applicant can re-apply after improving the credit score which will increase the chances of loan approval and sanction.
By taking these steps, the individual will also make an attempt to manage debt better. Keeping the outstanding balance in revolving debt minimal will help improve credit score drastically.
The representative from IDBI Bank would guide the aspirant with the entire paper work. There are a set of documents required to be submitted alongside auto loan and photo of the prospective borrower. The list of documents required for Auto loan are as mentioned below –
Auto loans can be availed from the nearest bank branch or one can fill the form online to check for eligibility. The aspirant can call on the customer care number and a bank representative will get in touch with the potential customer to guide them through the process.
The IDBI Bank official website has an eligibility calculator for car loans. The calculator seeks some basic details like first name, last name, mobile number, date of birth, make & model of car, on-road car price, type of employment etc., based on which the loan eligibility is determined. The lowest car loan interest rate currently offered by IDBI Bank is 9%, for which the EMI per Rs. 1 Lakh loan amount comes to Rs. 4,555 for a 2 year loan and Rs. 2,061 for a 5 year loan. Car loan EMI in IDBI Bank depends upon loan amount, repayment tenure and interest rate.
1. Who can apply for auto loans from IDBI Bank?
Auto loans are extended for both salaried and self- employed professionals by IDBI Bank.
2. What is Multiplier based loan amount eligibility?
IDBI Bank calculates loan amount eligibility by applying a multiplier to net take home salary. This is the simplest method for calculating a loan eligibility used by banks. Generally, it is 2.5 to 3 times the annual salary for salaried individuals and 6 times the annual income for self-employed professionals. The multiplier depends on the bank’s internal categorization of the employer company based on its reputation, stability, size and growth in turnover.
3. What is FOIR based loan amount eligibility?
IDBI Bank will estimate Fixed Obligation to Income Ratio (FOIR) to ascertain the maximum EMI the aspirant borrower can service based on the current income and other monthly expenses. The bank applies a certain ratio to the income to estimate monthly expenses and then adds other EMI obligations to calculate the total fixed obligations. The proportion of fixed income to calculated fixed obligations gives the FOIR. Generally, banks lend up to a maximum FOIR of 0.50. Based on the FOIR, the bank will also estimate the maximum amount of EMI the borrower can service. IDBI Bank's assessment may be different from self-assessment of the potential borrower. Any differences in assessment may require the aspirant to readjust the loan amount requirement.
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