Vehicle Loan

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Overview

A vehicle loan, also referred to as an auto or car loan, is a financing option tailored to help individuals purchase a vehicle, such as a car, bike, or other motorized transport.
One of the defining aspects of a vehicle loan is that the vehicle being purchased acts as security for the loan. In case the borrower defaults on repayment, the lender has the legal right to seize the vehicle to recover the outstanding amount.
These loans are commonly provided by banks, credit unions, and various other lending institutions.

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Primary Features

Loan Amount

The loan amount is determined based on factors such as the vehicle’s ex-showroom or on-road price, the applicant’s income, and the lending institution’s criteria. Typically, lenders offer financing for a specific portion of the vehicle’s cost, usually ranging between 80% and 90% of its value.

Interest Rate

Vehicle loan interest rates may be either fixed or variable, depending on the lender’s offering. These rates differ across financial institutions and are affected by factors like the borrower’s credit history, duration of the loan, and current market trends.

Loan Tenure

The repayment tenure for vehicle loans usually falls between 1 to 7 years, though certain lenders may provide extended durations based on the borrower’s profile and loan terms.

Down Payment

Borrowers are typically expected to pay a down payment upfront, which represents a portion of the vehicle’s total cost. The specific amount varies depending on the lender’s policy and the type of vehicle being purchased.

Eligibility Criteria

Age

Most lenders require applicants to be at least 21 years old, with the upper age limit ranging from 60 to 70 years, depending on the lender's policy.

Income

A steady and verifiable source of income is essential, as it reflects the applicant's ability to repay the loan.

Employment

Personal loans are available to salaried employees, self-employed individuals, and business owners, subject to meeting the lender’s eligibility norms.

Creditworthiness

A strong credit score enhances the likelihood of loan approval and may also result in more favorable interest rates.

Documents Required

Required in Soft Copy Only

Basic

  • Completed Loan Application
  • ID Proof Aadhaar,PAN card,Driving license, Voter Id or Passport
  • Address Proof Bank Statement or Utility Bills - E.g.- Electricity Bill / Water Bill / Property Tax
Soft Copy Only

Income Proof for Self-Employed Individuals:

  • Balance Sheet and Profit & Loss Statements certified by a Chartered Accountant.
  • Income Tax Returns (ITR) ITRs for the past 2-3 years, along with computation of income and tax paid
  • Bank Statements Usually for Last 6 months' bank statements of your personal and business accounts.
Required in Soft Copy Only

Income Proof for Salaried Individuals:

  • Salary Slips: Recent salary slips (generally for the last 3 to 6 months).
  • Form 16 Income Tax Return form issued by your employer.
  • Bank Statements Typically, the last 6 months' bank statements showing salary credits.
Required in Soft Copy Only

Employment/Business Proof

  • For Salaried Individuals Employment certificate, appointment letter, or work experience certificates.
  • For Self - Empoyed Individuals Business registration documents, GST registration, professional practice certificate, etc.
Soft Copy Only

Vehicle-related Documents

  • Vehicle Quotation/ Purchase Invoice Provide a copy of the quotation or purchase invoice from the authorized dealer or seller.
  • Vehicle Registration Certificate if the vehicle is pre-owned, submit the copy of the RC book or transfer papers.

Types of Vehicle Loans

New Car Loan

Aimed at individuals planning to buy a brand-new car from an authorized showroom, this loan covers a significant portion of the car’s ex-showroom price. Repayment terms typically range between 1 and 7 years

Two-Wheeler Loan

Specifically designed for the purchase of scooters, motorcycles, or other two-wheeled vehicles, the loan amount is based on the on-road price, with repayment periods generally between 1 and 5 years.

Commercial Vehicle Loan

Ideal for businesses or individuals acquiring commercial vehicles such as buses, trucks, or vans. These loans assist in building or expanding a transportation fleet, with loan amounts and tenures varying based on the vehicle’s type and usage.

Loan Against Vehicle

This is a secured loan where borrowers can use their existing vehicle as collateral to raise funds. The sanctioned amount is based on the vehicle’s current market value, and repayment terms are set according to the lender’s guidelines.

Electric Vehicle (EV) Loan

Offered for the purchase of electric cars and two-wheelers, EV loans often include special benefits like lower interest rates and extended repayment options, in line with the growing demand for eco-friendly transportation.

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