How to get a car loan in India?

How to get a car loan in India? : Here is the answer. Nowadays, you’ll see car a basic need for every family. The individuals who can not afford a new car, are buying second hand cars. Because owing a car has become a basic requirement in the city. When you are buying a new car you’re not only buying a car but also a satisfactory and a relaxing life because you don’t have to look for someone when you are going out. You have your own vehicle and you can go with utmost freed. Buying a new car is beneficial than buying an old car as you invest your money as well save it. While when you buy an old car, there will be some repairing required as more often used cars are damaged. So don’t worry even if you are going to buy a new car.

You need to take care of your budget, set price and choose a specific car. You can take loan from the suitable bank and can buy your vehicle easily. Earlier, buying a car was a milestone in one’s life as one had to shell out a huge amount of money, but now one can simply take a car loan. So here are the steps that you need to take care while buying a car and taking a car loan.

10 Steps to get a car loan in India

Here are the 10 steps to get a car loan in India mentioned below:

1. Choose a car

You need to do a little search for buying a car. It depends upon your needs and budget. If you have a joint family, you may need 5 or a 6 seater car and if you have nuclear family, you may need a 4 seater. Set your budget. If you’re going to buy a new car, your monthly payment should not be more than 15 percent of your take-home pay. And if you go for buying the used car the same should be applied. Used or second hand cars are less expensive. So if you are a learner you can buy used cars.

eligibility criteria for car loan in indiaBuying a car is expensive but once you pay off your loan, you have the asset with you and can run it as long as you want. You can even lease your car. Leasing a car requires little money and you can drive luxury cars for less money. But when the lease period ends, you have no car. You need to buy it again. Choose car according to your needs and by setting the desired budget.

2. Check the eligibility

Check the eligibility criteria for taking loan. There are various different criteria for different categories. For salaries individuals, the individual must be 21 and should not exceed the age of 60 by the end of the period of loan. The individual must have 2 year experience in his field. The person should earn minimum of Rs 3 lakh including the income of his spouse. And the criteria for partnership firms, sole proprietor, private and public limited companies have different criteria.

car loan procedure in indiaCriteria for partnership is also same, the only difference is that it includes self employed individuals in the business. For sole proprietor, the individual must be in the business for 2 years. He should be a sole proprietor in the business of manufacturing, trading or services.

3. Decide loan amount

Decide the loan amount to be taken. Prefer public banks over private bank sector. Public banks provide lower rate of interest as compared to private banks. The car payment is divided into two parts, interest and the principal amount.

how to buy a car on loan in indiaThe loan amount depends upon your salary or the income you earn. You can present the amount either in monthly incomes or annually by paying 5 to 6 times more than the amount paid monthly.

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4. Documents required

Car loan requires documents which are necessary to be submitted to the bank. These documents include:

  • Identity proof as passport, driving license, pan card, Aadhar card etc.
  • Address proof as passport, voter id etc.
  • Age proof as 10th marksheet, birth certificate etc.
  • Car documents.
  • Income proof as 3 months salary slips, latest income tax return tax etc.

car loan approval process in indiaSo these are some of the important documents which are required when taking a car loan.

5. Compare Interest Rate

Interest rate is the amount of interest due per period, which is to be lent or borrowed. While taking a car loan, you should compare the interest rates of different banks. Usually public banks offer lower interest rates. The lesser the interest rate, the lower amount of EMI you have to pay monthly.

how to get car loan in indiaLike HDFC bank provides interest rate 8.50%- 11.25%, so if you have loan of Rs 1 lakh for 7 years so you need to pay around Rs 1500- 1800 monthly. Low interest rates give you long term effect.

6. Enlist all the banks in the city

If you want to get a car loan, you need to enlist the banks in your city. Choose a bank which provides a lower rate of interest.

which bank is best for car loan in indiaDon’t limit yourself in checking the financial institution from where you’ll take your loan. You need to check the loan and the amount they offer to you.

Click Here: How to keep a car in good condition? : 10 Best Car Care Tips

7. Check your credit

Keeping a track of your credit score is beneficial if you are going to get a car loan or any type of loan. Your credit score will help you in paying the amount of loan. A good credit score means that you have money in your pocket after taking the loan.

car loan process in indiaYour credit scores determines more than the amount of loan you get and the interest rates you pay. To grow your credit score, pay your bills on time and use your credit accounts on a regular basis.

8. Loan approval

When the banker finds all the necessary documents valid and the eligibility criteria fine with the client, the bank will go for loan approval within a short period. And you’ll be granted the loan for the desired time period.

best car loan in indiaYou need to pay the EMI’s monthly or annually as signed by you.

9. Loan repayment

When you are approved by the bank, your lender will provide you the details about your repayment term. This will let you know how much to pay in a month and it will also list your interest rate.

car loan in IndiaThe shorter the repayment term, the lower the interest rate and the monthly payment will also be lower.

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10. Loan disbursement

The loan amount is payed to the client by the bank after a certain period of time. The disbursal of loan is based on some formalities that you have to fulfill once the loan gets permitted. Avoid the extra payment of interest on the amount disbursed.

car loanNow, I hope you have understood “How to get a car loan in India from bank?”.

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