The Ultimate Guide: Car Loans & Best Car Loan Providers

In the post COVID era, there has been a sharp shit in preference from shared mobility to personal mobility. This has resulted in a steep increase in demand for new and used cars. Helping convert the dream of buying a new car into reality, car loans have become a helpful tool for customers. So, if car loans were on your priority list, then you have come to the right place. CarLelo has put together a list covering all aspects of availing a car loan and discusses the best car loan provider available. Keep reading till the end to stay informed.

Must-know factors for a Car Loan:

If you have decided to go for a car loan, there are certain things you should be aware of as a customer. Here we have compiled a list of important factors to consider before applying for a car loan.

1) Eligibility For Car Loan

Although most of the best car loan providers have different eligibility criteria for providing car loans, there are some common requirements. Below is a general list to give you a brief idea:

1)    Age of the Applicant - 25 - 60 years
2)    Income Tax Returns- 3 years (Minimum 30 percent of the loan amount
3)    A constant source of income (Self-employed or Salaried)
4)    Place of Residence – India
5)    Appropriate credit profile

2) Car Loan Details

There are lots of factors to be looked upon when thinking about a car loan. The most important ones are given below. Always check for them with the bank you intend to take a loan from.

- Loan Tenure: 1 -7 years
- Interest Rate:  7 percent and above
- Processing fee: Rs 6000+ (Government sector banks charge documentation charges)
- Guarantor Requirement:  Varies with bank

3) Credit Reports For Car loans

Every bank checks your credit history. Hence, this is an important factor when applying for a car loan. A credit score of 750+ may mean a lower interest rate and faster processing of your loan. But a lower credit may even result in the rejection of a loan. So, one has to be vigilant in this thing. Pay all your bills on time to improve your credit score.

Benefits of Car Loans:

?    Wide variety of options are available when choosing a car loan.
?    Most car loan offerings in India are secured loans. This implies that the car serves as the security/collateral for the loan.
?    An assured fixed amount is to be paid monthly as the interest rate is fixed. 
?    On- the road price of the car can be financed. Some of them even provide 100% car loans, which means no down payment is to be made.
?    Car loan is easier to get as compared to other loans
?    Procuring a car loan is usually simple when compared to other loan products. 
?    Most car loans will finance the on-road price of the car

Steps to Avail a Car Loan

Here are the general steps you need to follow for getting a car loan:

Steps	Requirement	Inference
Apply for a car loan	Compare all offers available	To find the loan that offers you the highest loan amount and the most affordable interest rate
Submit Income Proof	Bank Statement (last 6 months) Pay-Slips (last 3 months) IT- Returns (last 2 years)	Lender wants to establish your ability to repay the loan
Submit Proof of Address and Identity	PAN Card, Voter’s ID, Aadhaar Card, Passport, etc.	Lender wants to establish your nationality, identity, and permanent address
Credit History	PAN Card	Lender wants to check your past credit records and establish if you can be trusted to make regular repayments
Information About Vehicle	Sales Receipts from the showroom from where the vehicle was purchased	Lender must confirm that the deal was affected as intended
Proof of Insurance and Driving License	Copies of the vehicle’s Motor Insurance and your Driving License	Lender must establish that all laws and protocols are followed with regards to the purchased vehicle.

 

Best Car Loan Providers

#1) HDFC Car Loan

Out of the many banks, the best car loan provider currently is the HDFC bank, as it has the best overall combination of features it provides to loan seekers. Following are its highlights -

HDFC Bank Car Loan Eligibility

HDFC Bank car loan can be availed by the below-mentioned individuals/entities:
?    Self-employed sole proprietors
?    Self-employed individuals/professionals at partnership firms
?    Self-employed individuals in public-limited companies including directors
?    Self-employed individuals/professionals who own private companies
?    Salaried individuals

- Minimum loan amount: 1 lakh
- Effective Interest Rate - 7.95%
- Loan duration - Up to 84 months
- 100% finance for on-road price for select models

Although, the Kotak Mahindra bank provides the best interest rates at 7%, and a minimum loan amount of 1 lakh rupees. Other banks include -

Axis Bank Car Loan -

- Minimum loan requirement: 1 lakh
- Repayment tenure (maximum)
- Effective Interest Rate - 7.45% onwards
- Loan duration - Up to 84 months
- 100% finance for on-road price for select models

Bank Of Baroda Car Loan- 

- Minimum loan requirement: 2 lakhs
- Effective Interest Rate - 7% onwards
- Loan duration - Up to 84 months
- 90% finance for on-road price for select models

Canara Loan -  

- Minimum loan requirement: 1 lakh
- Effective Interest Rate - 7.3% onwards
- Loan duration - Up to 84 months

ICICI Loan- 

- Minimum loan requirement: 1 lakh
- Effective Interest Rate - 7.5-9% (depending on tenure)
- Loan duration - Up to 84 months

SBI, Axis bank, and ICICI bank are a few other banks you can check as the policies and interest rate keeps revising!

Read Als: Major Banks Under One Roof for New Car Loans

Do’s and Don'ts

- Never apply for a car loan which exceeds your income
- Always go for a car loan with the best interest rate with the required loan amount
- Never apply for car loans with multiple banks as the rejection means a bad credit score
- Always look for hidden fees and charges
- Special offers may be given with some car loans. Do check them.
- Going for a car with high service and maintenance charges is not a good idea as you will have monthly EMIs to be paid too.

Comparison Of Car Loan Interest Rates Of All Banks In 2022

Bank	Interest rate (%)	Processing fee (INR)
Axis Bank	7.45-14.5	3500-5500
Bank of Baroda	7 onwards	1500
Bank of India	6.85 onwards	1000-5000
Canara Bank	7.30 onwards	1000-5000
HDFC Bank	7.95-8.30	3500-8000
ICICI	7.90 onwards	5500-8500
Central Bank of India	7.25-7.70	2000-20000
Bank of Maharashtra	6.40 onwards	NIL
IDBI Bank	7.50 onwards	3500-5500
Federal Bank	7.65 onwards	NIL

Source: newindianexpress.com/

Read Also: Tips and Tricks to Manage a Car Loan

Car loan EMI calculator

Every bank provides an EMI calculator on its official website. You can go over there and check how much you will need to pay monthly once your loan is approved. Various key factors of car loans are the loan amount, interest rate, tenure of the loan, and processing fees.

So this was all you needed to know about car loans and the best car loan providers! For more content revolving around the automotive world, be sure to check out our blog page!