Car loans are rapidly becoming the most preferred means of buying a car whether new or use. In order to tap into this huge customer base the banks and other financing institutions are offering several concessions in car loans with more and more relaxed terms for eligibility of car loan customers. The loans are also being customized in order to suit the requirement of different kinds of customers.
Before applying for car loan it is worthwhile to know the basic eligibility criterion that is required by most of the lending institutions in India. The eligibility criterion that has been set by the banks are quite similar in the case of both leading public sector banks such as SBI, Union bank of India, PNB and Indian Bank as well as private sector banks such as ICICI, GDFC or Citibank.
Basic Eligibility Criteria
Age: The age criteria set by the banks and other financing institutions for car loans is as per the guidelines of the Reserve bank of India. For people who are salaried the minimum age for application for a car loan from a bank is 25 years and the maximum age permitted for such loans is 58 years. However in case of people who are self employed, freelancing professionals or run their own businesses the minimum age criteria is 28 years of age at the time of applying for the car loan while the maximum limit is 65 years of age.
Employment: The banks look for a certain set of employment details while approving a car loan. A minimum period of employment of 2 years in case of salaried persons and a minimum period of 3 years for self employed persons is required by the banks before disbursing the car loan to an individual. In case of any limited company applying for a car loan it should gave been in existence for at least 2 years while applying for the car loan and must have all documented proof such as Income Tax returns available.
Income: There are several guidelines for determining the minimum income of an individual applying for a car loan in India. Most of the nationalized banks require a minimum annual income of Rs 2. 5 Lakhs for being eligible for a car loan. However in certain cases private banks and lending institutions this limit may be lowered depending on other credibility factors. Private firms applying for a car loan should have a minimum profit of Rs. 2 Lakhs after taxes annually to be eligible.
Credit Rating: A check of the credit rating of an individual is mandatory before the approval of a car loan currently. CIBIL is the primary institution that provides credit rating of individuals to most banks in India. Thus having a poor credit record can be a major impediment in availing a car loan.
One must bear in mind that the lending institution take into account the basic repayment capacity of an individual while approving car loan and thus there could be various changes in the eligibility at the banker’s discretion which can be negotiated for by the smart car loan customer.