Descriptions

🚗 What is an Auto Loan?

An Auto Loan is a secured loan offered by banks and financial institutions to help you purchase a new or used car. The vehicle you buy acts as collateral (security) for the loan.

💰 How much can you borrow?

Usually up to 90%–100% of the on-road price for new cars.
For used cars, lenders generally finance around 70%–80% of the value.

📅 Loan tenure

Usually ranges from 1 year to 7 years.
Longer tenure → smaller EMI but higher overall interest paid.

💡 Interest rates

Vary by lender, credit score, and car type.
Current rates in India generally range from 7% to 14% per annum.

📝 Eligibility criteria

Minimum age: 21 years at the time of application, maximum around 65 years at loan maturity.
Income requirements: Vary, but salaried individuals generally need a minimum net monthly income (e.g., ₹20,000–₹25,000).
Stability of job or business.
Good credit score (usually above 700 improves chances).

📄 Documents required

For Individuals	For Self-employed
ID proof (Aadhaar, PAN)	ID proof (Aadhaar, PAN)
Address proof	Address proof
Income proof (salary slips, bank statements, Form 16)	ITRs, audited financials, bank statements
Car quotation or proforma invoice	Car quotation or proforma invoice

⚡ Features & benefits

✅ Flexible tenure — Choose between short or long repayment periods.
✅ Attractive interest rates, especially for new cars.
✅ No need for additional collateral — car itself acts as security.
✅ Quick processing & disbursal.
✅ Special schemes for certain professionals (like doctors, CAs) and for women.

💳 Charges & fees

Processing fee: Usually 0.5% – 2% of loan amount.
Prepayment or foreclosure charges: Applicable if you repay early (may vary from 0% to 5% depending on lender and when you prepay).
Late payment charges.

🔄 Repayment method

EMI (Equated Monthly Installment) through ECS, NACH, or post-dated cheques.

🚩 Things to keep in mind before applying

✔ Check your CIBIL score — higher score helps get lower interest rates.
✔ Compare offers from multiple banks and NBFCs.
✔ Calculate EMI affordability — do not overstretch your budget.
✔ Read all terms and hidden charges carefully.
✔ Consider down payment to reduce EMI burden.

❓ FAQs

✅ Can I get 100% finance?

Some lenders offer 100% on-road price financing, but usually it depends on your profile and credit history.

✅ Can I sell the car before fully repaying the loan?

Technically no — you must get NOC (No Objection Certificate) from the lender before selling.

✅ Can I prepay the loan?

Yes, but check prepayment charges.

✅ Is income proof always required?

For salaried and self-employed borrowers, yes. Some banks offer loans to pre-approved customers without fresh income proof.

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