Not very long ago, owning a car was a status symbol. To buy a car, you had to shell out a huge amount of money, all at once. Not everyone could afford this. But with growing needs, changing demographics and an increasing number of lenders offering car loans, owning a car is no longer a luxury, but rather an affordable reality.
Car loans are offered to customers who need financial assistance to purchase a vehicle.
Rising market demand for financing new as well as used cars has led several lenders to offer car loans that are not just highly affordable but also customer-friendly. You borrow the money at a fixed interest rate and repay the amount over time.
Car loans have interest rates as low as 8.4% and are normally repaid over a 1-7 year period. Repaying a car loan in installments enables you to pay for this major purchase over time instead of all at once, making it easier to purchase a car to improve your lifestyle immediately.
Cars are expensive. Purchasing a car means spending a huge amount of money. While you may have enough savings to pay for the purchase of a car, taking a car loan is still a good option, mainly for 2 reasons:
In India, there are three basic types of car loans:
The features of a car loan may vary individually from one lender to another. There are several customized and specialized offers made by lenders to customers. However, here is a generalized look at some of the characteristics and benefits of car loans in India:
With a host of lenders providing car loans, purchasing a car is not a difficult task. But choosing the right car loan is. While there may be many attractive deals on car loans, here are a few things you should consider before deciding which one to go for:
Car loans are very popular in India and are being offered by several leading lenders. So banks and NBFCs compete to offer the best deals to borrowers. Some of the features of these deals include lowest interest rates, flexible repayment tenure, 100% financing, easy and quick e-approval etc. Here’s a list of popular lenders offering the best deals on car loans:
List of leading NBFCs providing car loans in India:
| S. No. | Car Loan Provider | Interest Rates |
|---|---|---|
| 1. | State Bank of India | 8.90%- 9.20% |
| 2. | ICICI Bank | 8.82%- 12.75% |
| 3. | Sundaram Finance | 8.75% |
| 4. | HDFC Bank | 8.50%- 11.25% |
| 5. | Kotak Mahindra Prime Ltd. | 11.50%- 13.50% |
| 6. | Axis Bank | 8.50%- 11.25% |
| 7. | Bank of Baroda | 8.80%- 10.55% |
| 8. | Canara Bank | 8.70%- 9.35% |
| 9. | Punjab National Bank | 8.90%- 9.10% |
| 10. | Bank of India | 9.25% |
Documentation needed to apply for a car loan
Here is a checklist of required documents that can help you complete the loan application process:
Some lenders do provide 100% of the cost of the car. Others provide 85% of the “on road” value of the car.
Yes, many lenders allow you to repay the loan early. Some lenders require a 6 month minimum outstanding period and some have fees for early payment.
Most types of cars do qualify for financing including sport utility vehicles, sedans, and multi utility vehicles. Each lender has policies for what types of cars they will loan against.
Most lenders require the car to serve as security (collateral) and may require a guarantee from the borrower or a co applicant depending on your level of income.
Applying for a car loan with the same bank where you have an account may help you get a quick, hassle-free approval. However, by doing this, you may miss out of some of the best deals on car loans offered by other lenders in the market. So, it is always a good idea to compare loans before choosing one. The easiest way to do this is to apply online through FinMarket.in. With a single online application, we bring you the best car loan deals from various leading lenders in India.
EMI calculators are a common feature on the websites of most lenders. This EMI calculator works in a simple way. Once you enter the details of your car loan, including the loan amount, interest rate, and tenure, it calculates the EMI in a matter of seconds. However, to manually derive the EMI, you need to apply the principal amount, tenure, and rate of interest in the traditional mathematical formula used for calculating EMI, which is as follows:
EMI = [P x R x (1+R) ^N] / [(1+R) ^N-1]
Here, P stands for the Principal Amount, R for the Rate of Interest per month (which is, Interest rate per annum/ (12x100), and N refers to the number of monthly installments.
You do not need a guarantor for car loans unless you fail to meet any of the eligibility criteria such as the age, income or credit score requirement.
No. Car loans do not bring any tax benefits. Unlike home loans, car loans are not eligible for rebates. So always remember not to exceed your requirement while taking a car loan.
If you have had a good repayment history with the lender for your past loans, then you may be able to leverage your prior relationship as well as your good credit score to negotiate and get a car loan at a lower interest rate.
There are two ways in which you can close out your car loan:
More importantly, remember that paying off the due amount does not complete the process of closing a car loan. You should also obtain a No Due Certificate from the lender. When you buy a car on loan, the car is hypothecated (pledged as security) to the lender. Once the loan is paid off, this hypothecation has to be cancelled, for which you should approach the Regional Transport Office (RTO) and produce the No Due Certificate from the lender. Following this, your RC book is updated by removing the hypothecation.
Your car loan application may be rejected for one or many of the following reasons:
With online loan application made possible, applying for a car loan is now a simple process.
Step 1: Compare car loans in the market and pick the one that most suits your requirement
Step 2: Visit the lender’s website and fill-in the online application form
Step 3: Submit the required information along with the requested documentation
Step 4: Get approval
If you want to further simplify the process, leave it to a FinMarket.in. Visit our website and submit the requested information. We will connect you to the top lenders in the car loan space and bring you the best deals on car loans. You need to fill-in just one online application to get personalized car loan offers from multiple lenders.
How to apply for a car loan online through FinMarket?
Most lenders who provide online services allow you to track the status of your loan application online, by using the loan status tracker on their website. All you need to do is enter your name, mobile number, date of birth, and loan application/reference number in the tracker to track the status of your application, instantly.
Apply now for a Car Loan online.
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