A vehicle loan is issued when the individual or company wants to purchase a car. Car loans are offered to individuals after checking the credit history. Individuals or groups who match the criteria required for the loans are offered vehicle/car loans.
Yes, vehicle loans are offered for used cars as well. However, in such a case, the interest rates may differ from that of a new car. However, the loan would only bear the price of the car. The costs like transfer of registration and others need to be borne by the lender.
Most of the lenders do not specify the minimum salary requirement. However, the loan might be rejected in case the salary does not exceed a predetermined threshold value, which is an internal requirement. Applying with a co-borrower will increase the chances of success.
The loan approved for you would generally be about 80% - 90% of the on-road price of the car. At times, 100% of the ex-showroom price of the car can be lent. The percentage of financing will depend on the price and type of car. It will also depend on the fact that the car is old or new.
The documents that you need to submit is quite like any other loan. The car loan application would need self-attested supporting documents of income like the last three pay slips and the last acknowledged ITR. You also need to submit proofs of address and identity, along with PAN card.
The tenure of a car loan typically varies from 1 to 5 years. The shorter the tenure, the higher the EMI would be. The reverse is also true for the cars having a long tenure. The tenure can even be longer and spread up to as much as 7 years.
If you cannot meet the eligibility criteria, a loan guarantor or co-borrower needs to be present. These lending criteria include age, monthly income or credit score. You can otherwise apply for the vehicle loan without such a requirement.
The loan application can be rejected on 4 grounds - if you have a bad credit score, you have defaulted your repayments, you have applied and been rejected for loans multiple times or you do not meet the eligibility criteria like age and a minimum income.
No. A vehicle loan will not offer tax savings benefits like a home loan. This is why the car loan amount must be tied to your actual requirements. Splurging on a fancy car by opting for a large loan amount cannot be a sustainable idea.
The interest rate applicable to the car loan can be leveraged by the credit history and prior relationship with the prospective lender. The regular payment of the EMIs can fetch you a car loan at a lower interest rate. The credit score matters a lot.