How to Take Car Loan in Inida

By Nrega Job Card

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How to Take Car Loan in Inida: With time people want their lives to improve and progress. People adopt luxuries in their life to change their lifestyle. Changing lifestyle includes getting a car. People dream of buying a car. People want to go somewhere in their own car and if they are short of money then car loans are helpful in buying a car.

People who want to buy a car and do not have money can take a car loan. Many things have to be kept in mind to take a car loan. In this article, how to take a car loan and many important things related to car loan have been explained, reading which will provide you the right guidance in taking a car loan.

So without any delay, let us know in detail – how to get a car loan?

What is a Car Loan?

Vehicle loan is the amount of money taken from a government bank or private company in the form of loan to buy a new or old car. Both new and old cars can be purchased with a car loan. For buying a new car, a car loan charges a lower interest rate and for buying an old car, a higher interest rate is usually charged. Therefore, it is always beneficial to take a loan against a new car.

Best Bank to Take car Loan

The best banks for taking car loan are as follows, which give you loan on new and old car at low interest –

  • SBI Bank (SBI Car Loan Yojna)
  • ICICI Bank (ICICI Car Loan Yojna)
  • HDFC Bank
  • AU Small Finance Bank
  • Bank Of India
  • Bank Of Baroda
  • Panjab National Bank
  • IDFC First Bank
  • Axis Bank

The interest rate at which you will get a car loan depends on your CIBIL score i.e. credit score.

How Much is a Car Loan?

Car loan available from government banks and private companies is 80% to 90% of the cost of the car. The bank bases the loan on the value of the car, which does not include car insurance, tax and registration loan. Before giving a car loan, the bank or company ensures how eligible the customer is for the car loan payment. Loan for car is given only after seeing the repayment capability.

आधार कार्ड से 10,000 का लोन कैसे मिलेगा

At what Interest Rate is a car Loan Available?

Those who want to take a car loan have to pay the interest rate according to the price of the car. Banks and companies charge car loan interest rates as per their own, which can be more or less. Proper information about the interest rate can be known by contacting the bank and company. Mainly banks and companies charge interest rates ranging from 8.70% to 9.20%. Some important things related to interest rate are as follows:

  • Under car loan, the interest rate charged on a new car ranges from 7.25% to 13.75%.
  • Under car loan, the interest rate charged on old car is 12.50% to 17.50%. Interest rates may vary depending on the bank and company.
  • Around ₹ 500 to ₹ 5000 has to be paid in the name of processing charge. Charges of different banks and companies may vary.
  • GST has to be paid on car loan which may vary by bank and company.
  • Car loan interest rates are determined based on certain factors. As:
  • Age of the borrower
  • Loan borrower’s annual salary
  • Loan borrower’s income source
  • Information about which bank and company charges what interest rate on car loan can be found by visiting the website of the bank and company. You can also go to the bank or company and get information related to the interest rate from the officials there as to how much interest rate can be obtained for how long.

What is the Tenure of car loan?

The tenure of car loan is mainly between 1 to 7 years. Mostly loan can be taken for 3 to 5 years. In many banks the time period for taking a car loan is 7 years. The tenure of the car loan also affects the EMI and interest rate.

If the tenure of the car loan is short and you take the car loan for a shorter period of time, then the interest rate will be less and the EMI amount will be available for the same period. If you take a car loan for a longer period, the interest rate is higher and the EMI amount is also less.

Documents Required to Take car Loan

Some documents are required to take a car loan. Which are needed at the time of taking a car loan.

The documents required to take a car loan are as follows:

  • As identity Proof
    1. Aadhar card
    2. PAN card
    3. driving license
    4. passport size photo
    5. ID card etc.
  • As Address Proof
    1. Voter ID Card
    2. Passport
    3. telephone bill
    4. electricity bill
    5. Life insurance policy etc.
  • As salary proof
    1. Job Card (Issued by NREGA)
    2. Current Salary Slip (Last Three Months)
    3. Form 16 as salary proof
    4. Bank Statement (last 6 months)
    5. income tax return verification

Eligibility for Taking Car Loan

Some qualifications have been prescribed for taking a car loan. It is necessary to have these qualifications when applying for a car loan. The eligibility criteria for taking a car loan are as follows:

  • The person taking car loan must be a citizen of India.
  • To avail a car loan, one should be minimum 21 years and maximum 65 years.
  • To avail a car loan, the annual income should be more than Rs 3 lakh.
  • Telephone bill and postpaid bill are required for car loan.
  • Income source proof is required.
  • Job seekers should have 2 years of work experience.

What is the Amount of car Loan?

The amount of car loan depends on the bank and company giving the car loan. Before giving a car loan, the bank and the company ensure that the car loan taker can repay the loan amount.

For which banks and companies check the job history and income of the customer so that they can know how much loan can be given to the customer.

By giving details of annual income, the company and bank can give loan of 4% to 6% of the income. Mainly banks and companies finance 80% to 90% of the customer’s earnings. Many banks provide finance up to 100%.

How to Take car Loan the easy way

Loan against new or old car can be taken from any recognized bank or private company. Car loan can be applied for both online and offline. Which are as follows:

How to apply for car loan online

One can easily apply online for a car loan. As:

  • First of all, to take a car loan, one has to go to the official website of any bank.
  • By going to the bank’s website, one has to click on the car loan options given on the home page of the website.
  • After clicking on the car loan option, click on the Apply Now option to apply.
  • An online form comes in which fill all the information and submit,
  • After submission, the bank and the company themselves contact and take the car loan process forward.

How to Apply Offline For car Loan

To apply offline for a car loan, one has to go to the bank and company from which the car loan is to be taken. One has to meet the officer there and talk to him to get a car loan. To take a car loan, a form has to be filled. The form has to be filled and submitted along with all the documents. Bank officials check your loan eligibility and proceed further.

Why is it Necessary to Take a car Loan

Car loan is taken as per need. A car is needed for personal needs, for going to office, for taking children to school, for any kind of travel etc. To overcome the dilemma of not buying a car due to lack of money, the option of taking a car loan is chosen so that one’s dreams come true. Banks and companies can provide you a loan for the car of your choice after checking your credit history.

Car Loan EMI Information

Some of the things related to which payment can be made through car loan are as follows:

  • To take a car loan, it is better to first calculate the EMI. By calculating EMI, it is known how much money has to be paid at the time of loan repayment.
  • If the amount of loan payment is known then the loan can be applied for accordingly so that any kind of problem can be avoided.
  • Wherever you are thinking of taking a car loan, you can calculate the EMI of your loan with the help of the car loan EMI calculator on the official website of that place.
  • The EMI amount depends on the loan interest rate and processing charge.
  • To know the EMI, you can find out the EMI amount, loan tenure, car loan interest rate, processing charge by filling all this information in the EMI calculator. Car loan can be taken cheaply by knowing the various EMIs.

Loan for car can be taken in many ways. There are mainly three types of car loans. Which are as follows:

Loan for new car

Loan taken for a new car comes under new car loan. The tenure for repayment of new car loan has been fixed from 1 to 7 years. The loan interest rate is fixed at around 9% to 14%.

loan for old car

Loan taken for an old car comes under old car loan which is also called used car loan. The interest rate on loan for an old car is higher. The tenure for old car loan repayment is maximum up to 5 years.

Car loan Against old car Mortgage

The third type of loan comes under loan against car. In this, a loan is taken for the car by mortgaging the old car. Due to financial constraints, when an old car has to be mortgaged for loan, then this type of loan can be taken. In this the interest rate is higher and the payment time is less. If the credit score is not very good then this type of loan can be used.

There are many types of charges for car loan. Charges vary in different banks. The expenses incurred in car loan are as follows:

Prepayment Charge

According to this charge, when taking a car loan, some part of the loan is deposited as advance. Banks charge certain charges on repayment of car loan which come under prepayment charges.

Processing Charge

When the loan process is completed for taking a car loan, the bank charges some percentage of the loan amount which comes under the processing charge. Sometimes processing charge is not levied, whereas many banks deduct processing charge while transferring the loan amount.

Foreclosure charge

Further foreclosure charges are levied on repayment of the loan amount before the tenure of the loan. Some banks charge for prepayment of loan while many banks do not charge foreclosure.

Benefits And Features of Car Loan

Car loans fulfill the dream of owning a car due to the many features that motivate one to take a loan. There are many benefits of car loan which make taking a car loan beneficial. Which are as follows:

  • You can buy every type of car through car loan.
  • Car loan can be taken from 85% to 100% of the price of the car.
  • If the car loan borrower pays 100% of the car’s price, then zero down payment is required.
  • Top up facility can also be availed on the existing car loan.
  • You can get many offers if you are a customer of the bank.
  • By prepaying the car loan, the increase in the car loan can be reduced. The interest rate on a new car is lower.

The information about who can apply for a car loan is as follows:

Salary Earners

Salaried people can take loan on the basis of their job experience of more than 2 years.

Self Employed

If you are self-employed then your work must be 3 years old.


For car loan, the businessman has to provide bank statement which is 6 months old along with ITR which is 2 years old, photograph, Form 16, salary slip of the bank account.


Farmers get car loan by providing some documents. Government valid documents like – PAN Card, Passport, Aadhar Card, Driving License, Address Proof, Photograph, Bank Statement (6 months old), ITR (2 years old), Form 16, Sales Tax Certificate and Audit Balance Sheet are required to be submitted.

Things to Keep in Mind While Taking a car Loan

There are some things to keep in mind while taking a car loan. Which are as follows:

  • Car loan should not be taken in haste. Information about car price should be obtained from many places.
  • Take car accessories along with the car.
  • Get car insurance from a reliable place.
  • While taking a car loan, try to reduce the price of the car. Try availing car loan services.
  • Try to reduce the interest rate, prepayment charge, processing charge etc.
Main pointDescription
Car LoanFacts (may vary from bank to company)
How Much is a Car Loan?80% to 90% of the car price
Car loan Interest Rate7.25% to 11.00% (estimated)
Where to get loan fromGovernment and private bank company
Three types of car loansNew Car Loan, Used Car Loan, Loan Against Car
CIBIL score required for car loanMore than 700 -750

What should be the CIBIL score for car loan?

Before taking any type of car loan, banks and private companies check the CIBIL score. Whether the loan is accepted or not largely depends on the CIBIL score. If the CIBIL score is not good then the interest rate has to be paid higher or the loan application is rejected.

Therefore, it becomes necessary to know what the CIBIL score should be for a car loan. CIBIL score should be more than 750. If CIBIL score is good then car loan is easily available and many offers are also available. If the credit report is good, it has a positive impact on the CIBIL score.

Read Also

FAQs: How to Take Car Loan in Inida

How can a car taken from a car loan be sold?

A car taken from a car loan cannot be sold. The entire amount of the car loan has to be deposited before selling.

For how many days does the bank give car loan?

The bank gives car loan for 1 to 7 years. This may vary from bank to bank.

Are the interest rates on car loans the same in all banks?

Interest rates on car loan are not the same in all banks.

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Hello friends, my name is Bheem Bhavani and I am a professional blogger and a Youtuber. On NregaJobCard.Net blog we give you information about various types of government schemes and bank loans. We do not give any kind of loan on this blog, we just share the correct information related to the loan with you. Thanks for visiting the blog!

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