Planning to apply for a Car Loan? We have answered some frequently asked questions to help you get started. Read on.
Have you been thinking of getting a new car this festive season? The right Car Loan can make the purchase easy and affordable. We have answered a few frequently asked questions to help you get started.
Additional Reading: Car Loan Application 101
How much loan amount am I eligible for?
Your Car Loan eligibility depends on various factors like age, income, employment status, debt repayment history etc. The eligibility criteria differ from bank to bank. For example, a few banks provide a loan for the full ex-showroom price of the car, while others may offer a loan of up to 80% or 90%.
Before you decide on the loan amount, it’s smart to assess your current financial situation and determine how much money you can comfortably shell out each month.
Check your Car Loan eligibility here.
Banks usually offer Car Loans for a maximum tenure of 5 to 7 years. However, depending on your repayment capacity, some lenders may extend the term to a few more years as well. But, do keep in mind that the longer you extend your loan tenure, you’ll be paying more as interest.
What are the documents required for a Car Loan?
Keep these documents handy before applying for a Car Loan:
- Photo ID and age proof
- Signed application form with a photograph
- Address proof
- Bank statement for the last six months
- Salary slips for the last three months
- Form 16
- Income Tax returns from the last three years with income computation
- Balance sheet and Profit and Loss account which is CA-certified or audited from the last three years
How is the EMI calculated?
Before you approach any bank for a loan, it’s important to find out how much you will be spending each month on your monthly Car Loan EMIs. Our Car Loan EMI calculator will help you calculate your EMIs in a jiffy!
Check this: Your Car Loan EMI Calculator Guide
What factors should I consider before opting for a Car Loan?
Here are a few factors that you must consider before taking the plunge:
The interest rate
The rate of interest can have a major impact on your Car Loan EMIs. Do your homework and explore your options with different lenders before taking your pick.
Processing charges and prepayment terms
Compare loan prepayment terms and different charges like processing fee etc. across different lenders before settling on one.
Check your Credit Score
Your Credit Score has a major impact on your Car Loan application. If you have a high Credit Score, you are more likely to strike a better Car Loan deal with the bank.
Click here to check your FREE Experian Credit Score in less than 3 minutes!
Most banks usually take an average of 5 – 10 days to approve a Car Loan application, assuming that all the documents are in order. Select a lender who has a good reputation with respect to turnaround time and customer service.
Additional Reading: Can I Get A Car Loan For A Second-Hand Car?
What should I do if the bank rejects my loan application?
Firstly, find out why the bank rejected your loan application. Sometimes, the bank rejects your application because the loan amount you requested for is too high. If that is the case, then you can reapply for a lower amount. However, if your application was rejected because of your low Credit Score, you must take measures to improve it before applying again.
Additional Reading: Car Loan Handbook: All Questions Answered
With extensive paperwork and running around, buying that dream car can become a tedious process. Don’t worry! To make things easier for you, we have paperless Car Loan offers from top banks exclusively for you. Go ahead and explore your options right away!