How To Apply for a Car Loan Online?

Personal Loans

Owning a car has become a necessity rather than a luxury. Fortunately, today with the emergence of several financial institutions, interest rates for car loans are less and online car loans can be availed within no time. If you apply for car loans online, you can get 100% financing of on-road price for select models with interest rates starting at 7% p.a. and flexible tenures of up to 8 years.

This post takes you through how to apply for a car loan online in India, interest rates, documents required, eligibility criteria, loan foreclosure, tax benefits, and more. Read on!

Car Loan Interest Rates In 2022

How to Apply for Car Loan Online?

Documents Required For Car Loan

Here are a few documents you need to avail a car loan:

• Identity Proof – Aadhaar card, PAN card, Voter ID or Passport.
• Age Proof – Birth certificate or PAN card
• Address Proof – Utility bills, Aadhaar card or passport.
• Income Proof – Salary slips or Form 16.
• Passport sized coloured photograph

Eligibility For Applying For Car Loan

The basic eligibility criteria required for applying for a car loan are as follows:

• The applicant must be an Indian citizen.
• He or she must possess a valid Aadhaar card and PAN card.
• The minimum age of 18 years and maximum age of 65 years is required to avail of a new car loan.
• He or she must be a salaried employee or a self-employed individual.
• The applicant must have a stable income.
• The borrower must have a good credit score. A minimum credit score of 650 and above is necessary to get low-interest rate car loans.

Also read: Apply for two-wheeler loan: Eligibility, benefits and documents required

Benefits and Features of Applying for Car Loans Online

Here are a few noteworthy features and benefits to apply for a car loan online-

• Fast Approval
  The entire process of availing of car loans online is fast and easy if you have the required documents at your disposal. The loan application gets instant approval, and your funds are credited to your bank account instantly.

• Minimal Documentation
  Like personal loans, car loans require only minimal documents to complete the process. All you need is your income proof, PAN card and Aadhar card. However, this may vary from lender to lender.

• Flexible Repayment
  You can customise a repayment plan according to your convenience. Choose the EMI plan based on your income and outgoings. The repayment tenure usually ranges between 5 and 8 years.

• Low-Interest Rates
  Low-interest rates car loans can be availed online without difficulty if your credit score is 750 or above. 

• EMI Calculator
  You can calculate your car loan EMI with an online EMI calculator. This will help you choose your loan tenure accordingly.

Do’s and Don’ts When Applying For a Car Loan

Tips To Quickly Get a Car Loan Application Approved

Here are a few tips to get your loan approved faster –

• Improve Your Credit Score
  Ensure to have a good credit score to get your car loan approved faster. A minimum of 650 and above is a requirement for availing of a car loan.

• Pay Off Your Debts On Time
  Make sure to pay your already existing loans on time, because that indirectly reflects your credit history. Avoid penalties and keep a clean record of improving your chance of getting a new car loan faster.

• Complete Other Formalities
  To avail of a new car loan faster, be prepared with your down payment and other required documents. If the miscellaneous formalities are completed, the chances of your loan being rejected are less.

Also Read: How To Avail Best Personal Loans For Car Finance In India?

Foreclosing Car Loan

If you’re planning to apply for a car loan, you must think and understand about foreclosing the loan. Foreclosing means that the applicant decides to pay back the loan amount before the tenure terminates. Most financial institutions charge a penalty fee, although a few lenders allow you to foreclose the loan without any penalty. Once you have foreclosed the loan, you will get full ownership of the car. Before deciding to foreclose the loan, take a look at the rules and regulations prescribed by the institution to understand if foreclosing a loan attracts penalties or not.

Foreclosing a loan would only be a good option if your income has increased and you wish to clear off your liabilities.

Car Refinancing

Car financing essentially means that the applicant will take a new loan to repay the balance of the existing car loan. People go for the refinancing of car loans if they wish to save money. You may choose to refinance your auto loan to enjoy low-interest rates, an extended tenure period and a reduction of EMI payment burden.

Car refinancing should only be opted if the interest rates on car loans have been reduced from that of the original loan, or if your financial condition has improved. However, refinancing a car loan would not be a prudent decision if you have already paid a substantial amount of the original loan or if the value of your car has depreciated.

Tax Benefits On Car Loan

If you decide to purchase an electric vehicle (EV) with the help of a loan, it could help you save a considerable amount of money. As a part of the government’s efforts to curb pollution, the government has introduced many benefits for purchasing an electric vehicle. The Finance Minister in the Union Budget of 2019-2020 announced a tax rebate of Rs. 1.5 lakh on the interest paid for an electric car loan. Therefore, you will be able to get a benefit of around 2.5 lakhs during the entire tenure of the loan. The government has also reduced the tax rates on electric vehicles from 12% to 5%.

How is a Personal Loan for a Car Better than a Car Loan?

Though this may vary from individual to individual, however, there are plenty of reasons that make personal loans a more viable option that car loans for auto refinancing. 

1. A personal loan is an unsecured loan and hence, will not require any asset to avail of the loan. Whereas, a car loan is a secured loan and you will have to hypothecate your car to the bank.
2. Personal loans are much better than car loans because they are flexible and require minimal documentation, much lesser than car loans. With instant personal loans, you can get a loan within minutes. However, availing of a car loan from the bank requires you to complete numerous formalities which can make the entire process of availing the loan complicated and tedious.
3. Personal loans have a flexible end-use and can be used for various purposes; however, car finance from banks is only given to purchase an automobile.

Applying for personal loans through Navi is a straightforward and fast process. It does not require much documentation, and the technology-driven process of Navi checks your loan eligibility within minutes. Navi offers an EMI calculator where you can easily check your EMI plan and other loan-related amounts. Install the Navi app on Android or iOS now!

FAQs on Applying for a Car Loan

Before you go…

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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article. 

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