How Car Loans Work In India
Buying a car is one of the most important financial decisions which you will take in your life. For convenience of payments, you will surely look out for a financing option. To meet this apt need of financing your vehicle, several banks and NBFCs like Magma, Bajaj Finance, Jayabharat Credit Ltd, etc. provide 100% car loans to interested parties.
In India, even the car dealers are known to collaborate with auto loan financiers to provide a good deal on the vehicle. Yet, many people are not sure about how to avail a loan, and how to go about the entire process. Here is a comprehensive guide on how to avail an automobile loan.
Step 1: How to Apply?
Applying for a vehicle loan is simple, provided you have shortlisted the right financing body. To shortlist an appropriate financier, zero down on the total car cost and then get quotes online from different lenders or loan comparison websites.
Generally, there are two ways of applying for a loan
- Apply Online
- Request a Callback
In both the methods, the credit officers from the respective bodies will take you forward through the form filling and application process.
Step 2: What is the Eligibility?
Eligibility for the loan will vary from borrower to borrower. Eligibility conditions are broadly classified into 2 major categories:
- Be employed with the current employer for more than 2 years.
- Be at-least 21 years of age at the time of applying for a loan.
- Should earn at-least Rs. 1,50,000 per annum ( This amount will vary with different NBFCs)
- Should have residential stability for at-least 1 year.
Self Employed Customers:
- Should have been in the current business for at-least 2 years.
- Should be more than 21 years and less than 67 years old while borrowing
- Should earn at-least Rs. 1 lac or more per year while applying
Should have residential stability of minimum 1 year
Note- Additional criteria may be proposed depending on the lending party’s loan process.
Step 3: What will the interest rate?
Interest rates for car loans will vary from 12 to 16%, depending on the principal amount, loan tenure, and credit history of the applicant.
Additional charges, such as foreclosure charges and processing fees will be levied.
Also, there will be late payment fees on failure to repay the EMIs on time.
Once you fill the required details in the application form, the credit officer assesses your application and repayment capacity. If you pass the standard threshold, then you are issued a loan within 8 to 10 days.