Thanks to the plethora of car financing options available in the market today, buying your own car is not a distant dream anymore.
Nowadays, people opt for Car Loans quite readily, and even banks offer lucrative deals and benefits for both new and used Car Loans. Banks have different interest rates for Car Loans, which are determined after calculating the borrower’s income, age, repayment capacity, tenure and several other factors.
It’s good to know the details of the Car Loan application process before you plan to apply for one. Knowledge is power – like, all 2108 BHP of it! Let’s put pedal to the metal and get started, shall we?
Car Loan Application Checklist
Gear up! Here’s a Car Loan document checklist for both salaried and self-employed individuals that would be great to keep handy before you apply for a Car Loan.
Identity Proof: Who one earth are you? Irrespective of whether you are a salaried or self-employed person, this is the first document that you will need to submit to the bank. Any of the following documents should suffice as your identity proof:
- Voter ID card
- Ration card
- Driver’s license
- Passport
- PAN card
Age Proof: No, unfortunately, age isn’t just a number in this case. The next important document that you need to keep handy while applying for a Car Loan is an age-proof document. Any KYC-acceptable document, which has your date of birth mentioned, can be submitted as your proof-of-age document. Your school-leaving certificate or birth certificate, which has your date of birth specified, will also help.
Generally speaking, anyone between the ages of 18 and 70 can apply for a Car Loan. Of course, this criterion will differ from bank to bank.
Address proof: Where do you live? In order to apply for a Car Loan, you need to submit address proof confirming your present residential address. You can submit any of the documents accepted under KYC norms or any utility bills such as telephone, water or electricity. A letter from a recognised public authority like the Municipal Corporation verifying your current residential address can also do the trick.
Proof of Income: How heavy is your pay cheque? Proof of income, quite possibly, is the most important document that will determine your Car Loan amount. Banks check your salary and repayment capacity before disbursing the loan amount.
Depending on whether you are a salaried or self-employed individual, you need to submit the following proof-of-income documents:
For salaried individuals:
- As a salaried individual, you need to furnish a copy of your latest salary slips (3-6 months depending upon the bank) or salary certificate
- Form 16 and copy of ITR as applicable is required
- Last 6 months’ statement of all your bank accounts
- In case you got a job recently, then a copy of the appointment letter has to be submitted. Else, an employer’s certificate about your employment history.
For self-employed individuals:
As a self-employed individual, you will need to submit the following documents:
- A brief introduction of your business or profession
- Last 3 years’ ITR, all certified by a Chartered Accountant
- Balance sheet, profit and loss account statement of your business
- MoA / Partnership deed etc. as applicable
- Last 6 months’ statement of all your bank accounts
Additionally, keep a set of passport-size photographs and a cheque for the loan processing fee. Note: The required proof-of-income documents will vary from bank to bank.
More handy hints about Car Loans
- The more you earn, the higher your chances of getting a larger loan amount
- A regular income and no other additional loans will also improve your loan amount
- New cars are more easily financed than used cars, while the loan amount will be higher for a new car owing to the higher prices of new car models
- The longer the tenure of your Car Loan, the better will be your repayment capacity as the EMIs will be lower. (Although a longer tenure also means you will end up paying a higher interest on your loan.)
Now all that information should help you make an informed decision about a Car Loan. So, how about checking your eligibility for a Car Loan quickly? Start your engines…