A car loan is a personal loan which is are used to purchase a car of choice.
Car Loan needs to be repaid in equated monthly installments (EMIs) every month.
Car loan tenure can go up to 7 years depending upon car bought and repaying capacity of the borrower.
The car purchased using a car loan remains mortgaged to the lender during the tenure of the loan.
Car Loan Financing is done on ‘On-Road price' that includes the cost of car, registration, insurance and extended warranty and cost of accessories.
On an average, banks / NBFCs require a 10% margin on car loans i.e. the car loan amount sanctioned will be limited to 90% of the ‘On-Road price'.
Maximum Car Loan amount will be 2.5 times of net annual income of the borrower including the income of his//her spouse who can become a co-borrower.
Any Individual between the age of 21-65 years of age can avail Car Loan.
Generally, banks / NBFCs charge up to 1% of the Loan Amount (applicable GST) as processing fee.
There is no pre-payment penalty or foreclosure charges applicable for car loans and hence borrower can look at prepaying the loan, given that it is a depreciating asset.
Banks / NBFCs also do reimbursement finance for the cars purchased out of one’s own funds at rate of interest applicable to New Car Financing, provided the car is not be more than 3-month-old.
Given that the pre-owned car market is expanding rapidly, Banks / NBFCs also now provide loans to buy pre-owned cars or second-hand cars as they are generally known if bought from certified used car dealers.
You would need to submit the following documents along with the completed application form:
Statement of Bank account of the borrower for last 6 months.
Signature identification from bankers of borrower(s).
A copy of passport /voters’ ID card/PAN card.
Proof of residence.
I.T. Returns/Form 16: 2 years for salaried employees and 3 years for professional/self-employed/businessmen duly accepted by the ITO wherever applicable to be submitted.
Proof of official address for non-salaried individuals.