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Factors affecting your Eligibility for a Car Loan

For a hassle free loan process, ensure you are up to the mark on each of these parameters

Monthly Income

A bigger pay-cheque can mean a bigger car. Your income is the key factor in determining your car loan amount.

Age

People with ages between 18 and 65 years are eligible for car loans across various lenders in India. However, different lenders may have different age policies.

Car Value

The car’s value affects the eligible loan amount. Loan amounts are typically about 85 – 90% of a new car’s road price and about 80% of a used car’s valuation.

Credit History

A good credit history can make getting a car loan a breeze. A CIBIL Score of over 750 will put your dream car loan on the fast lane of disbursal.

Employment Status

As a Salaried person, you must have have worked at least for 2 years with your current employer, to become eligible for a car loan

Self-employment Status

It is preferable that self-employed professionals or businessmen have been engaged in the same line of business for a minimum of 2 to 3 years.

Relationship with Bank

Your relationship with the bank can go a long way in increasing your loan amount eligibility at a reduced interest rate.

Employer Quality

If you work with one of the Fortune 100 companies of India, your loan eligibility will increase, as banks will regard your job stability as good.

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A car is a dream that many of us wish to achieve one day, right. In the present scenario, buying a car has become easier as more and more lenders are coming up with a slew of easy and attractive financing options to appeal the customers. Unlike earlier when only a few elite class used to have the privilege of owning a car, today even an individual with a salary of say Rs. 15,000-20,000 can also buy the 4-wheeler. This has been made possible due to the repayment of the loan in the form of equated monthly installments (EMIs), which constitute a portion of interest and principal payable each month from your pocket. Not only new cars, but even a used vehicle can also be bought on a loan. However, the repayment tenure can vary in each of the cases. The maximum loan tenure for new cars is seven years, while for used cars it is 5 years. Any individual, be it salaried, self-employed businessmen or professionals with a regular source of income can avail a car loan from banks and non-banking finance companies (NBFCs) across India.

Car Loans Interest Rates

Needless to say, the most vital factor that you must look into is the interest rate on your car loan. Higher the interest rate more will your pocket pinch and vice-versa. Interest rates are determined based on the lending rates of the lender. Car loan interest rate can either be fixed or floating. With fixed rate, the rate of interest remains the same and changes when the loan is given on a floating rate. All floating rate car loans are subject to revision of MCLR by banks from time to time. The floating rate can thus be an add-up of the MCLR or the same. You can check below to find out the interest rates of different lenders.

Table Showing Interest Rates, EMI and Others of Different Car Loan Lenders

Lenders Loan Tenure Interest Rate Per Lac EMI Max. Loan Amount Processing Fee Foreclosure Charges
State Bank of India (SBI) 7 years for new car
5 years for old car
9.60%-9.65% p.a. for new car
13.05% p.a. for old car
Rs. 1,640-1,642 for new car
Rs. 2,278 for old car
Upto 85% of the on-road price for new car
Upto 2.5 times of net annual income for old car
NIL for new car
0.50% of the loan amount plus service tax for old car
Minimum- Rs. 450+S.T.
Maximum-Rs. 9,100+S.T.
NIL
HDFC Bank 7 years for new car
5 years for old car
9.25%-11.25% p.a. for new car
10.50%-17.50% p.a. for old car
Rs. 1,622-1,725 for new car Rs. 2,149-2,512 for old car Upto 90%-100% of on-road price for new car
Upto 80% of the valuation of old car, limited to 3-6 times of your net annual income
Rs. 2,825-5,150 for new car
2% of the loan amount plus Rs. 200 or Rs. 5,200, whichever is lower for old car
3%-6% of the principal outstanding on a given date.
No foreclosure allowed before 6 months from the date of loan disbursement.
ICICI Bank 7 years for new car
5 years for old car
10.75%-12.75% pa. for new car
15.50% p.a. for old car
Rs. 1,699-1,806 for new car
Rs. 2,405 for old car
Upto 100% of ex-showroom price of new car
Upto 80% of the valuation of old car
Rs. 2.500-5,000 for new car
2% of the loan amount or Rs. 6,000, whichever is lower, for old car
5% of principal outstanding on a given date.
No foreclosure allowed before 6 months from the date of loan disbursement.
Axis Bank 7 years for new car
5 years for old car
9.50%-15% p.a. for new car
15%-20% p.a. for old car
Rs.1,712-1,765 for new car
Rs. 2,379-2,649 for old car
Upto 85% of on-road price of new car
Upto 90% of valuation of old car
Rs. 3,500-5,500 for both new & old cars 5%-10% of the principal outstanding after 180 days from the date of disbursement.
No foreclosure allowed before 6 months from the date of loan disbursement.
Punjab National Bank (PNB) 7 years for new car
5 years for old car
9.60%-9.85% p.a. for new car
Above 9.90% p.a. for old car
Rs. 1,640-1,652 for new car
Starts from Rs. 2,120 for old car
Upto Rs. 1 Crore or 25 times of net monthly salary or business income, whichever is lower in case of new car
Upto 70% of the valuation of old car
1% of the loan amount, subject to a maximum of Rs. 6,000 for both new & old cars NIL in the case of floating rate loan.
2% of the principal outstanding in fixed rate loan.
No fee if the prepayment is done from own sources
Kotak Mahindra Bank 7 years for new car
5 years for old car
11.50%-13.50% p.a. for new car
15%-21% p.a. for old car
Rs. 1,739-1,846 for new car
Rs. 2,379-2,705 for old car
Upto 90% of the ex-showroom price of new car
Upto 90% of the valuation of old car
As applicable by the bank 5.75% of the principal outstanding plus service tax

Car Loan Eligibility

Car loan eligibility simply means the amount of loan that you can get to buy your dream 4-wheeler. Different lenders set different eligibility criteria for the approval of car loan application. Below is a table to know the common eligibility criteria of car loan across the lenders in India.

Car Loan Eligibility Criteria

Parameters Salaried Self-employed
Age Age should be between 21-60 years Age must be between 21-70 years
Income A minimum salary of Rs. 10,000-20,000 is required A minimum annual income of Rs. 1,00,000 is needed
Job/Business Status Work experience of atleast 2 years with a minimum of 1 year with the current employer A minimum of 2-3 years in the same line of business is needed

Factors Affecting Car Loan Eligibility

  • Monthly Income- Monthly salary or business income is a vital factor that decides the limit upto which you can get the loan to buy a car. You always have a good chance of getting more loan on a higher monthly income.
  • Age- Car loan eligibility is based on age as well. Even though the age criteria differs across different banks and NBFCs, but usually the lenders give loan to people with an age of 18-65 years
  • Car Value- The loan amount eligibility also hinges on the car's road price (Ex-showroom price+RTO+Insurance+Accessories, if any). Banks disburse car loan at about 85%-90% of the on-road price. If you are buying a used car, then the loan amount eligibility will be about 80% of the valuation of the vehicle as assessed by the valuation officer appointed by the lender. But make sure you do not buy a car with over 4-5 years in use as most of the lenders will be reluctant to finance on such vehicles.
  • Car Model Type- Your loan amount eligibility can be influenced by the model you opt for. As car is a depreciating asset, banks can give you a higher loan for a vehicle having a greater resale value compared to the one with a lesser resale value
  • Credit History- Credit history is vital to the approval of your car loan application and subsequent disbursal. You may have a good earning but your poor credit history can make you ineligible for a car loan. So, make sure you maintain a good CIBIL score preferably 750 and above to get the car loan approved from most lenders.
  • Employment Status for Salaried- If you are a salaried professional, you must have worked for atleast 2 years with a year of experience with the existing employer for a smooth car loan approval.
  • Business Longevity for Self- employed-Self-employed professionals or businessmen will have to be in the same line of business for a minimum of 2-3 years to get the nod for a car loan.
  • Relationship with Lender- You can take advantage of your good relationship with the lender to negotiate for a loan at competitive interest rates.
  • Category of Your Employer- If you working among the top fortune 100 companies of India, then your loan eligibility will increase as banks will view your job stability to be good there. In the absence of the same, it is vital that you earn reasonably higher so as to get the desired amount of loan from the lender.

Documentation

Proofs Salaried Self-employed
Age & Identity Proof Passport Copy/PAN Card/ Voter ID card, Photo Driving License with birth date (laminated, recent, legible)/Photo ration card with DOB/Employer certificate/ID/School/College Leaving Certificate Passport Copy/PAN Card/ Voter ID card, Photo Driving License with birth date (laminated, recent, legible)/Photo ration card with DOB/Employer certificate/ID/School/College Leaving Certificate
Income Proof Form 16 for last 2 years, Latest Salary Slip, 6-month bank statement IT returns for the last 2 years along with audited balance sheet, P&L account statement for 2 years, Shop & establishment act certificate / sales tax certificate / SSI registered certificate / copy of partnership
Residence Proof Latest Telephone Bill/ Electricity Bill/Property Tax Receipt/Passport/ Voter ID Latest Telephone Bill/ Electricity Bill/Property Tax Receipt/Passport/ Voter ID
Signature Verification Proof Passport copy/PAN Card Passport copy/PAN Card
Passport Size Photographs Applicable Applicable

Features & Benefits

  • Funding available upto 80%-100% of ex-showroom or on-road price of the car
  • Loan amount available upto 80% of the valuation of old car
  • Easy Documentation
  • Fast Processing
  • Flexible Repayment Options
  • Hassle-free & Transparent Process
  • Quick Approval

How to Apply?

You can apply for a car loan through various mediums ranging from going online to visiting the nearest branch of the lender. Of the options available at your disposal, the best would be to apply online as it is easy to execute. All you require is to visit the official website of a bank or NBFC. You can find the link of 'Apply for Car Loan' at a specified point of the website. Click the link, submit the required details along with a scanned copy of the relevant documents for the processing of your car loan application. Other ways would be to submit your loan application form and the required documents at the bank branch. The moment you do so, the lender will start investigating the details and assessing your eligibility for a car loan. If everything goes fine, you would be greeted with a hassle-free loan disbursal to buy your dream car.