In the past, having a car was seen as something only rich people could afford. But now, in our growing world, having a car is important for getting around the big cities. Even if you don’t have all the money upfront, you can still buy a car with the help of a car loan. Getting a car loan is much easier now. You can apply online without any hassle and without any paperwork. Many banks offer car loans at good interest rates. This means you can borrow money to buy a car and then pay it back in smaller amounts over time.
It’s much simpler than before. Just with a few clicks you can fill your car loan application.
This way, you can choose a car loan that fits your budget. You can pay back the loan in manageable parts each month. This way, you can own a car without worrying too much about money.
Car Loan Interest Rates 2023
| Name of the Bank | Interest Rate (p.a.) |
| State Bank of India | 8.65% p.a. onwards |
| Indian Overseas Bank | 8.85% p.a. onwards |
| Jammu Kashmir Bank | RLLR + 0.25% p.a. onwards (floating)RLLR + 0.75% p.a. onwards (fixed) |
| Canara Bank | 8.80% p.a. onwards |
| HDFC Bank | 8.85% p.a. onwards (Rack Interest) |
| Karur Vysya Bank | 9.35% p.a. onwards |
| South Indian Bank | Repo Rate + 5.15% p.a. onwards |
| IDBI Bank | 8.80% p.a. onwards (floating)9.20% p.a. onwards (fixed) |
| Yes Bank | Contact the bank |
| Karnataka Bank | 9.41% p.a. onwards |
| Federal Bank of India | 11.00%Â p.a. onwards |
| Tamilnad Mercantile Bank | 10.60% p.a. onwards |
| Punjab National Bank | 8.75% p.a. onwards |
| Union Bank of India | 8.85% p.a. onwards |
How To Apply
Car loans can be availed through different modes.Â
- Directly visit the bank branch.
- Apply online through your bank’s internet/mobile banking portal.
- Get the financing through the car dealer.
The bank you choose will collect your documents and initiate the application process, which includes verifying your CIBIL score, the value of the asset (vehicle), eligibility criteria, and more, and then give a decision on your loan application based on the evaluation results.
Eligibility Criteria
There are certain eligibility conditions that are to be met for any car loan, and one must make sure to have a proper understanding before application. Check out these factors to decide whether you are eligible to buy a car-
| Details | Salaried | Self-employed |
| Age | 21 – 60 years | 18 – 65 years |
| Annual income | Rs 25,000 | Minimum turnover of Rs 40 lakh |
| Credit Score | 700 | 700 |
| Loan Tenure | Up to 7 years | Up to 7 years |
| Loan to Value Ratio | Up to 100% | Up to 100% |
Documents Required
- Photo ID and Age Proof
- PAN card
- Passport
- Driving license (mandatory)
- Signed application formÂ
- Three passport size photographs
- Residence Proof
- Valid passport
- Voter ID card
- Driving license
- Postpaid utility bill (gas bill and electricity bill)
- Updated passbook or bank account statement
- Notarised registered rent agreement
- Bank statement for the last six months
- Salaried individual
- Last three months’ salary slips
- Form 16 or Income Tax Returns
- Self-employed individual
- Balance sheet and profit and loss account, computation of income for last two years.
- Income Tax Returns – last two years for applicants, 26AS, Traces
- Business proof :
- Gomasta License, Registration Certificate, Service Tax Registration, among others
- IT Assessment/Clearance Certificate
- Income Tax Challans/TDS Certificate (Form 16A)/Form 26 AS for income declared in ITR.
Important Things To Know
Before you apply for a car loan at a bank, we suggest that you keep the following things in mind.
1.Do your research
Research the rates, fees, and the other terms and conditions offered by multiple banks and lenders to understand the market and then choose the lender where you will submit your car loan application.
A slight difference in the interest rate and other terms may result in a huge difference over time.
Similarly, get quotations from different dealers for your desired vehicle. Further, some of these dealers may have a tie-up with the banks and may offer the same vehicle at a discounted price. Approaching multiple dealers can help you find and get the best deal for your car.
2. Provide complete documentation
Upon deciding the lender, you will approach, go through their website and keep the documents you need to submit with the loan application ready. Check for the validity of your driver’s license and other documents and get it renewed if the expiry is nearing.
Do not give the lender any chance to delay/disapprove the loan just because your documents aren’t up to the mark.
3. Consider the total cost of owning the car
As stated earlier, the total cost of ownership is an important factor when purchasing a car. But many people fail to see the big picture.
To figure out the total cost of owning a car, you will have to consider the fees and charges applicable, the nature of the fees and charges, the interest rate, the down payment, the total money you will pay to the bank from the start of the loan until the time you completely pay off the debt, the fuel cost, the car insurance premiums, the tax you pay, and many other expenses.
Every bank may have set a different processing fee and documentation charges. Some lenders levy a penalty if you wish to close the loan account well before the loan tenure. All these factors play an important role while choosing the lender.
4. Check for offers and discounts
Most lenders provide festival offers and discounts during Indian festivals, such as Dasara and Deepavali. There may be many other occasions when the lenders or the car dealers come up with discounts and offers.
At times, there can be 0% finance schemes as well. Look out for such offers to save some pennies.
Important Factors Affecting Car Loan
- Credit Score: Lenders check your credit score to see if you’re reliable for a car loan.
- Debt To Income Ratio: They look at your income and other payments to check if you can afford the loan.
- Down Payment: You usually need to pay some money upfront as a down payment.
- Age Of The Car: The age of the car matters more for used cars and affects the loan terms.
Way Forward
To be able to buy luxuries like cars you need to have a solid savings/investment strategy.
Fello can help you save and invest like a pro. Fello is a great avenue to develop a saving habit. The rewards make saving fun, and the investment opportunities make saving even more rewarding. Fello is also a great way to protect your money from inflation. By investing your money in Fello, you can grow your money and keep it safe from the effects of inflation. With prudent investment decisions and patience, you can work towards achieving your financial dreams with these rewarding assets.
