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 the 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 shown growth double-digit growth over the years. The growth is seen across car categories which include compact cars, 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.

When it comes to car loans in India, in general, the following features and benefits are offered. Note that, the following is a generalized look at the advantages offered by car loans. Individually, car loan lenders may have highly customized and specialized offerings for their customer base.

• It helps you purchase a car even if you don’t have all the money for it right now.
• Most car loans will finance the on-road price of the car.
• Some car loans will even finance 100% of the on-road price. This means no down payments.
• With some banks offering financing in the crores, you are not limited in your choice of cars
• Most car loan offerings in India have secured loans. This implies that the car serves as the security/collateral for the loan.
• Procuring a car loan is usually simple when compared to other loan products. Individuals with slightly unsavory credit scores can also hope to procure one. However, this option differs from bank to bank.
• Car loans in India often offer fixed interest rate options. This means you are always assured of a fixed amount that needs to be repaid monthly.
• Many lenders will offer interest rates based on your credit score so a high score to get you a cheaper loan.
• Car loans are not meant for just new cars. A used car loan can help you buy a pre-owned car.

Some of the car loan benefits that come along with it to give you good financial mileage.

• Customized EMIs: A car loan borrower can easily customize the EMI as per his repayment ability while negotiating with the financier. Initially while paying a wider margin amount you can easily cut down the EMI that you are entitled to give over the tenure of the loan.
• Enhanced eligibility: In the current economic scenario, the competition among the financiers has increased which resulted in buyers benefiting in terms of maximum coverage of population under-car loan eligibility criteria. Whoever fulfills the basic minimum income stability can easily avail a car loan from financial institutions and banks.
• Subject to collateral: In the case of a car loan, the vehicle bought itself termed as the collateral excluding the need of serving other property as additional security for the loan. In the default event, the bank can only repossess your car and not any other asset.
• Low allowances: Now, the banks are eager to finance up to 95% of the car on road price which indicates that the customer does not require spending in accessories, registration, and insurance. Thus people having fewer funds can also enjoy the ecstasy of owning their dream car.
• Simple process: The loan procedure has been greatly interpreted in order to make a car loans look as attractive as the car. The documentation and approval process takes less than a day and in some cases, the spot approval is also possible to woo more people into taking the car loan.
• Ownership: You will have the discretion to make any modifications to the vehicle throughout the duration of the loan. At the end of the loan term, you will own the car.
• Dealer advantages: Car dealers have tie-ups with auto financing institutions to offer customers a one-stop car purchase shop. However, financiers offer a car loan with waivers of either an EMI or two or have zero interest to fetch more customers. Anyone can now buy a car with no money in their bank.

SBI New Car Loan Scheme is for purchasing new cars- ranging from small compact cars to larger ones such as MUVs (Multi Utility Vehicles) and SUVs. Customers can obtain SBI Bank loan for a new car at attractive terms and conditions set by the State Bank of India.

ICICI Bank can disburse car loans for buying both a new car and a pre-owned car and are rated as one the best car loans in India. The loan disbursals, loan quantum, tenure, and interest rate of the ICICI car loan vary as per the type of the car you choose to purchase. The car finance plans themselves are very affordable and give the customer flexible options for repayment. ICICI Bank car loan interest rates make it one of the best car loans in India, ensuring that you have to pay less every month. Moreover, you can also get a used car and a pre-owned car loan from ICICI Bank.

*The rates are indicative and subject to periodic change.

Availing an Axis bank car loan involves a simple and transparent process. Axis Bank offers affordable car loans at low-interest rates and the option of flexible repayment tenures. Plus, the bank provides very unique and quick customer service and a dedicated, customer-centric approach.

The car finance plans themselves are very affordable and give the customer flexible options for repayment. Axis Bank car loan interest rates make it one of the best car loans in India, ensuring that you have to pay less every month. Moreover, you can also get a used car and a pre-owned car loan from Axis Bank.

• Loan Amount: Rs.1 Lakh onward
• Applicable car loan ROI: Starting at 9.25%p.a.Up to 100% on-road funding
• Maximum Tenure: Up to 8 years

One of the most popular loan offerings of the bank is the Punjab National Bank car loan. Under these car finance plans, Punjab National Bank extends its financing services for the purchase of four-wheelers. This includes the Punjab National Bank car loan for a new car and for the pre-owned car loan. The car finance plans from Punjab National Bank cover an extensive range of four-wheelers including foreign and indigenous make Sports Utility Vehicles (SUVs), Multi Utility Vehicles (MUVs), Jeeps, Vans, and Cars. The used car loan is available to finance pre-owned cars that are no older than 3 years from the date of their RTO registration.

Canara Bank car loans can be availed for the purchase of both second-hand cars and new cars. This car loan can be availed by salaried persons, self-employed professionals, reputed companies, and firms. Apply for Canara Bank car loan and take benefit of a hassle-free loan application and sanction process. Canara Bank car loan scheme can be availed for the finance of cars of any make and model.

• Canara Bank offers new and used car loans.
• Canara Bank car loans can be availed for the purchase of all types of cars, irrespective of the model and the make.
• For new vehicles, car loan amount eligibility may be up to 90% / 85% / 80% of the total value. There is no maximum ceiling amount for the loan.
• For old vehicles, car loan amount eligibility is 75% of the agreed price or 75% of the value of the car, as assessed by an automobile engineer or Rs.15.00 Lac whichever is lower.
• The above-mentioned percentages are inclusive of the invoice value, life tax, registration charges, insurance premium, and other accessories.
• The tenure for a car loan is up to 84 months in the case of new vehicles and 60 months in the case of pre-owned vehicles.

The Bank of India Star Vehicle Loan Scheme is offered to individuals to purchase a two/four wheeler vehicles (not requiring a heavy-duty license), as well as for the purchase of used/second hand 2 and 4 wheeler (age of the vehicle not to exceed 3 years). This car loan can also be availed for the purpose of reimbursement of the cost of a four-wheeler purchased from its own sources.

• Can be availed for both new and used cars
• The maximum car loan amount eligibility limit for Indian make vehicles as approved by the Bank of India is Rs 25 lakhs
• The maximum car loan amount eligibility limit for imported cars as approved by the Bank of India is Rs 75 lakhs
• The minimum tenure for a car loan pre-defined by Bank of India is 12 months
• Repayment time for a new car loan is 7 years and the old car loan is 3 year
• Bank of India car loan interest rates for the new car is 10.65%

The following table explains the do’s and don’ts when choosing the right car loan:

When you take a car loan, you can repay it in equated monthly installments (EMIs) till the end of the repayment tenure. However, if you decide to pay off the outstanding loan amount before your tenure ends, you will be foreclosing or prepaying your loan. The foreclosure/prepayment facility is offered by most lenders for a penalty fee though some lenders may allow you to foreclose/prepay your car loan without charging you any penalty.

You can foreclose your car loan if your income has increased and you wish to clear off your liability. It also takes away your burden of having to make monthly EMI payments. Foreclosing a car loan will release the hypothecation on the car and give you full ownership.

As stated above, some lenders may charge you a penalty on loan foreclosure. Hence, before you decide to foreclose a loan, it is a good idea to go through the clauses associated with it carefully.

If, after taking a car loan, you need quick or additional funds for purposes such as a wedding, home renovation, medical emergency, etc., you can get a top-up loan on your existing car loan. You can avail up to 150% of the car’s value as a top-up loan. Most lenders that offer a top-up on their car loans will require you to maintain a clear payment record for at least 9 months. The process to avail a top-up loan on your existing car loan is quick and requires minimal paperwork.

Some of the banks that offer top-up on their car loans are HDFC Bank, Axis Bank, ICICI Bank, and Kotak Mahindra Bank.

When you take a new loan to pay off the outstanding balance on your existing car loan, it is known as car refinancing. You can choose to refinance your car loan if you wish to replace your current loan with better features such as low-interest rates, extended repayment tenures, etc., or simply to change the terms of your current loan. The most common reason why people refinance their car loans is to save money. When refinancing a car loan, you can avail a new loan that offers lower interest rates which, in turn, will save you money. You can also lower your equated monthly installments (EMIs) by choosing a longer repayment tenure with a new lender through car refinancing.

Car refinancing is a good idea when there has been a drop in interest rates since you took your original car loan, your financial condition has improved, you are unable to bear the burden of high EMIs, and if you feel you did not get a good deal on your car loan the first time around. However, refinancing on a car loan does not make sense when you have already made a substantial repayment of your original loan, your car value has depreciated, the prepayment penalties are high, and when you have plans to apply for new loans in the future as refinancing may impact your credit score negatively.

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 acknowledgment.

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.

• Age between 18 years and 75 years
• Minimum net monthly income of Rs. 20,000
• At least 1 year of employment with the current employer
• Must be salaried or self-employed, working for a government establishment or a private company

• Applicant/individual must be aged between 21 years and 65 years.
• The applicant must be either a Central/State Government employee, a professional or self-employed individual, or an individual who is engaged in agricultural and allied activities.

Salaried Individuals

• Aged between 21 years and 60 years
• Employed for a minimum of 2 years with at least 1 year with the current employer
• Earn at least Rs.3 lakh p.a.
• Have a telephone/post-paid mobile

Self-Employed Individuals (Sole Proprietorship)

• Should be in the business of trading, manufacturing, or services
• Aged between 21 years and 65 years
• Should have been in business for at least 2 years
• Have an annual income of at least Rs.3 lakh

Self-Employed Individuals (Partnership Firms)

• Self-employed partners in the manufacturing, trading or services business
• Should have a turnover of at least Rs.3 lakh p.a.

Self-Employed Individuals (Private Limited Companies)

• Owners of private companies in the manufacturing, trading or services business
• Should have a minimum annual income of Rs.3 lakh

Self-Employed Individuals (Public Limited Companies)

• Directors in public limited firms in the manufacturing, trading or services business
• Have earnings of at least Rs.3 lakh p.a.

Salaried individual

• The applicant must be at least 21 years of age, and the maximum age of eligibility being 70 years.
• Net annual salary of Rs.2.4 lakh p.a.
• The applicant must be employed for a minimum of 1 year.
• The income eligibility criteria will depend on the Form 16 and the salary slip submitted.

Self-employed individuals

• The minimum age of the applicant must be 18 years and the maximum age being 75 years.
• The minimum net annual business must be Rs.18 lakh for selected car models, while for other models, the minimum net annual business income must be Rs.2 lakh.
• The applicant must be employed for a minimum of 3 years.
• The income eligibility criteria will depend on the latest income tax returns.

Self-employed non individuals

• The minimum net annual business must be Rs.18 lakh for selected car models, while for other models, the minimum net annual business income must be Rs.2 lakh.
• The applicant must be employed for a minimum of 3 years.
• The applicant will have to furnish IT returns for at least 2 years along with the audited financials of 2 years along with the calculated income.

The below-mentioned individuals will be able to avail a car loan from Bank of Baroda:

• Salaried employees
• Partnership Firm partners, Proprietorship Firm proprietors, and Private and Public Limited Company directors
• Person of Indian Origin (POI)
• NRIs
• Farmers, professionals, and businessmen
• Corporate

The car loan can be used for the purchase of new Sports Utility Vehicles (SUVs), Multi Utility Vehicles (MUVs), and passenger cars for private use.

The eligibility criteria that must be met in order to avail a car loan from Bank of Baroda are mentioned below:

• The minimum ages of the borrower and the co-applicant at the time of applying the loan must be 21 years and 18 years, respectively.
• The borrower and the co-applicant cannot be more than 70 years at the time the loan ends.
• The credit score of the applicant must be at least 725.

The applicant must submit the below-mentioned documents alongside the completed application form:

Salaried Individuals:

• Bank account statement for the preceding 6 months
• 2 passport size photos
• Proof of address
• Identity proof
• Proof of income: Latest pay slips, Form 16
• Income Tax Returns or Form 16 for the preceding 2 years

Non-Salaried/Businessmen/Professionals:

• Bank account statement for the preceding 6 months
• 2 passport size photos
• Proof of address
• Identity proof
• Proof of income: Income Tax Returns for the preceding 2 years
• Form 16 for the preceding 2 years
• Audited Balance Sheet
• P&L statement for preceding 2 years
• Sales Tax Certificate
• Partnership Copy

Individuals Engaged in Agricultural and Allied Activities:

• Bank account statement for the preceding 6 months
• 2 passport size photos
• Proof of identity
• Proof of address
• Direct agricultural activity
• Allied agricultural activity (poultry, dairy, plantation, horticulture): Evidential proof of the activities running must be provided

Given below is the set of documents to be submitted according to the profession the applicant belongs to. One of the eligible documents can be submitted for each category.

Salaried applicants

Following are the documents to be furnished to apply for the ICICI Bank New or Used Car Loan:

Salaried Applicants

Self-employed Professionals

Self-employed Non-professionals

The documents that must be submitted by salaried employees and self-employed individuals are different. The documents that must be submitted are mentioned below:

Self-employed

• Identity proof
• Address proof
• Income Tax Returns
• Balance sheet with the profit and loss account statement

Salaried

• Address proof
• Identity proof
• Form 16
• Bank statement
• Salary slips

The documents that must be submitted to avail a car loan with Canara Bank are mentioned below:

• The completely filled application form must be submitted.
• 2 passport-size photographs of the applicant.
• Last 3-months’ salary slips or payslips must be submitted.
• Address proof such as telephone bill, water bill, electricity bill, LPG bill, Driving License, or Aadhaar card must be submitted.
• Last 6 months bank statement.
• Income Tax Returns for the last 3 years or Form 16 must be submitted.
• ID proof such as Permanent Account Number (PAN) Card, Aadhaar Card, Voter ID, or Passport must be submitted.