When you need a car loan in India, it is important to know how the process will go. There are certain parameters that have to be taken care of while applying for car loans in India and this article will guide you through those details. To help you understand better about how a car loan application works and what kind of clarity you can get with regards to the repayment process, here is some information that will definitely help you out.
Step 1: Shortlist your Car
Once you have shortlisted the car that you want to buy, you can then proceed towards checking if your bank will approve a loan for your new car. Lenders generally give out up to 85% of the ex-showroom price of the car as the loan amount and will not give more than that amount. For pre-owned cars, eligibility is usually much lower than this. Also, make sure that your personal details are correct before applying for a used car loan.
Step 2: Check your Eligibility
Your eligibility amount for car loan would basically depend on the following factors:
- Make & model of the car
- Total work experience as well as work experience with the current employer
- For self-employed individuals, the total duration of the business will need to be provided
- Proof of earnings
Step 3: Decide on the Loan Tenure, Loan Amount and EMIs
The car loan is an important consideration for you to take in order to afford the vehicle that you have chosen. Once you are eligible and have chosen the car, you can use some car loan calculators in order to check different options available. You must also decide on the loan amount and the loan tenure based on your monthly instalments as these aspects will impact the cost of buying the car and also how much it would be on your monthly instalments
Step 4: Negotiate for the Interest Rate and Other Charges
Your car’s price is not a fixed price. Once the loan starts accumulating interest in your bank account, it grows exponentially. However, it’s advisable to check the list of cars that the lender finances to get the most out of your car and overall loan deal. The interest you’d pay over the course of that loan can be considered as an additional cost on top of that car’s price. So take care to add this aspect to the car’s overall cost.
Step 5: Provide Relevant Documents
You must keep a basic list of documents ready, including your ID and proof of address, income and bank statements. Also make sure to send the documents once you have received a loan offer from the lender in order to avoid any delays during the loan process.
- Aadhar card, passport, pan card, driving license, voters ID, etc. as identity proof, pick any one from them
- Any one from Telephone bill, electricity bill, ration card, life insurance policy, passport, voters ID, driving license, etc. as address proof
- Latest salary slips & form 16 as income proof
- Self-employed individuals need to present latest income tax returns and bank statement of last 6 months
- Self-employed individuals with a partnership firm or private limited company or public limited company would additionally need to present an audited balance sheet, profit & loss account from last 2 years, company income tax returns from last 2 years, and bank statement of last 6 months
Step 6: Book your Car
Once the authorities give you a loan, you will be able to visit the dealer to complete the payment and booking. If you want to understand how a car loan works, read about the points you should consider before opting for a car loan and what you will need while applying to get this funding.
So this is all about How to Get a Car Loan in India?
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