Car Loan: An Overview

A Car Loan is a type of secured loan provided by banks, Non-Banking Financial Companies (NBFCs), and other financial institutions to help individuals purchase a new or used car. The vehicle itself serves as collateral until the loan is repaid in full.

Benefits of a Car Loan

1. Easy Vehicle Ownership
   Enables individuals to buy a car without having to pay the entire amount upfront.

2. Flexible Repayment Options
   Loan tenure usually ranges from 1 to 7 years, allowing comfortable EMIs.

3. Attractive Interest Rates
   Competitive interest rates offered based on creditworthiness and income profile.

4. Quick Processing
   Fast loan approval and disbursal, especially for salaried individuals or those with a good credit score.

5. Loan for New and Used Cars
   Available for both new and pre-owned vehicles.

6. Up to 100% Financing
   Some lenders offer up to 100% of the on-road price of the vehicle.

7. Improves Credit Score
   Timely repayments help build a good credit history.

Eligibility Criteria

Though requirements vary by lender, the general eligibility criteria include:

For Salaried Individuals:

• Age: 21 to 60 years

• Employment: Minimum 1 year of total work experience with at least 6 months in the current job

• Income: Minimum monthly income as required by the lender (usually ₹15,000 – ₹25,000)

For Self-Employed Individuals:

• Age: 21 to 65 years

• Business Continuity: At least 2-3 years in the current business

• Income: Stable annual income as per lender’s norms

Documents Required

For Salaried Individuals:

• Identity Proof (Aadhaar, PAN, Passport, Voter ID)

• Address Proof (Utility bills, Passport, Aadhaar, etc.)

• Latest 3 to 6 months salary slips

• Form 16 or Income Tax Return (ITR)

• Bank statements for the last 3 to 6 months

• Passport-size photographs

• Car quotation/proforma invoice from the dealer

For Self-Employed Individuals:

• Identity and Address Proof

• ITR for the last 2-3 years

• Bank statements for the last 6 months

• Business ownership proof (GST certificate, business registration, etc.)

• Balance sheet and Profit & Loss statement (audited if applicable)

• Car quotation/proforma invoice