A car loan is a personalized loan that can be borrowed from a lender for purchasing a car. Interest rates for car loans start from 7.00% p.a. with tenure ranging from 1 to 8 year. Car loans in India are offered by banks and Non- Banking Financial Companies (NBFCs) in the form of new and used car loans. To apply for a car loan is easy, convenient, and paperless and you can opt for one by submitting a car loan application form online.
Features of a Car Loan
- Car loans available in India are secured loans, so the car serves as the collateral of the loan.
- Car loans are easy to procure as compared to other personal loans. Therefore, people with slightly low credit scores can also opt for one.
- Loan available for new and used car purchases.
- Most car loans are available offering the on-road price of the car.
- Lowest interest rates available starting from 7.00% p.a.
- Tenure ranges from 1 year to 8 years.
- Some car loans also offer to finance 100% of the on-road price of the car (no down payments required).
- Some banks offer loan amounts in crores, therefore you can opt for a wide range of cars of your choice.
Car Loan Comparison
Car loans are offered by several lenders in India. It is available for buying both new and pre-owned cars. Car loan interest rates are both fixed and floating in nature, though most lenders offer fixed rates. Below stated is a list of comparison of car loans offered by major banks and financial institutions in India.
| Bank/NBFC | Loan Amount | Tenure | Interest Rate | Processing Fee |
|---|---|---|---|---|
| Bank of Baroda | Up to ₹1 Crore | Up to 7 Years | 7.25% p.a. onwards | ₹1500 + Taxes |
| Canara Bank | 80%-90% of the on-road price of the car | Up to 7 Years | 7.35% p.a. onwards | 0.25% of the loan amount |
| Axis Bank | Up to ₹7 Crore | Up to 5 Years | 8.7% p.a. onwards | 1.0% of the loan amount |
| Federal Bank | Up to 100% of the ex-showroom price of the car | Up to 7 Years | 9.05% p.a. onwards | Contact the bank for more information |
| SBI Bank | Up to 90% of the On Road Price of the car | Up to 7 Years | 7.70% p.a. onwards | 0.40% of the loan amount |
Car Loan EMI Calculator
For calculating car loan EMIs, you will require an input of 3 variables including loan amount, interest rate, and tenure. Then you can simply input them in the below provided car loan EMI calculator and calculate your monthly EMIs of your car loan.
Format: 12m, 36m, 3y, 7y
Monthly Payment (EMI):
₹85.61
Total EMIs:
12
Total Payments:
₹1,027.29
Total Interest:
₹27.29
Car Loan Eligibility
Certain conditions for eligibility are required to fulfill before opting for a car loan and you need to make sure to have proper understanding of that. Below mentioned are the eligibility aspects for a car loan.
| Criteria | Eligibility Requirements |
| Age of Applicant | For salaried- 21-60 yearsFor self-employed- 18-65 years |
| Income | For salaried- INR 20,000 per monthFor self-employed- Annual turnover of INR 40 lakh (minimum) |
| Credit Score | 750 and above |
| Work experience (for salaried) | Minimum 2 year in the same profession |
Documents Required for Car Loan
Car loan documents are required to prove your eligibility for a car loan. The requirements may vary from lender to lender, but the common documents are listed below.
- Identity proof: Voter ID proof/ Aadhar Card/ Passport/ Driving License/ PAN Card
- Address proof: Aadhar Card/ Passport/ Driving License/ Utility bills/ Ration Card
- Photo ID and Age proof: Driving License (mandatory)/ Passport/ PAN Card
- Passport sized photograph: 3 copies
- Signed application form
- Bank statement of last six months
- For salaried applicant:
- Income Tax Returns or Form 16
- Salary slip of last three months
- For self employed applicant:
- Income Tax Returns: Last 2 years for applicants, Traces, 26AS
- Business proof: Registration Certificate, Gumasta License, Service Tax Registration, and others
- Clearance Certificate/ IT Assessment
- Income Tax Challans/ For 26 AS for income declared in ITR/ TDS Certificate (Form 16A)
*Note: The list of documents required for car loan is subject to change as per the rules and regulations of the bank.
Car Loan Interest Rate and Fees
Car loan interest rate starts from 7.00% p.a. in India with a repayment tenure of up to 8 years. Though, depending upon RBI guidelines and policies, internal policies, and current market rates these interest rates may vary from lender to lender. To avail the lowest car loan interest rate, you can compare all available offers through online as well as offline mediums. A number of charges and fees are also associated with car loans.
Lenders also apply a number of internal charges and penalties with a car loan. Therefore, it is essential to go through all terms & conditions presented by the bank before availing a car loan.