How to Apply for a Car Loan Online – Its Interest Rates, Eligibility and Documents
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
| Car Loan Details | |
| Interest Rate | Starting at 7% p.a. |
| Loan Amount | Up to 100% financing |
| Processing Fee | 0.5% – 2% |
How to Apply for Car Loan Online?
To avail of car finance, follow the steps given below:
- Visit the Lender’s Website
Go to the lender’s website or download the app and go to the Car Loan section.
- Check your Eligibility & EMI
Check your loan eligibility and EMI obligations using online car loan eligibility and EMI calculators.
- Click Apply
Once you have checked the loan amount you are eligible for, click on ‘Apply.
- Submit the Required Documents
Submit all the mandatory documents. These may vary from lender to lender.
- Link Your Bank Account
Link your bank account details so that the loan amount gets credited to your account instantly.
- Loan Approval and Disbursal
The lender will run the final eligibility, credit score check considering they are satisfied with the documents that you have submitted. The timeline between loan application and disbursal may vary from lender to lender. Once your loan is approved, you will get the amount credited to your car loan account. Note that the final amount and interest rate are decided by the lender based on your credit history, repayment capacity, etc. If have an excellent track record, you might get approved for 100% financing for your car.
Calculate Your Car Loan EMI
Loan Amount
Rate of Interest (P.a)
%
Loan Tenure (Months)
Monthly EMI
0
Total Interest
Total Amount
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.
Benefits and Features of Applying for Car Loans Online
Here are a few noteworthy features and benefits to apply for a car loan online-
1. 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.
2. 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.
3. 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.
4. Low-Interest Rates
Low-interest rates car loans can be availed online without difficulty if your credit score is 750 or above.
5. EMI Calculator
You can calculate your car loan EMI with an online EMI calculator. This will help you choose your loan tenure accordingly.
Also Read
Do’s and Don’ts When Applying For a Car Loan
| Do’s | Don’ts |
| Choose the option that offers the best interest rates for car loans. | Do not apply for a loan amount above your eligibility, as this might increase the chance of rejection. |
| Read about the insurance premium of your car as it is a recurring cost. | Do not opt for a car with high maintenance costs as this may increase your financial burden. |
| Check out offers before applying for a car loan. | Do not rely on dealers for applying for a car loan as they may not give the best interest rates for car loans. |
Tips To Quickly Get a Car Loan Application Approved
Here are a few tips to get your loan approved faster –
1. 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.
2. 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.
3. 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.
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.
- 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.
- Personal loans are much better than car loans because they are flexible and require minimal documentation, much lesser than car loans. With instant cash 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.
- 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 now!
FAQs
The maximum amount that can be availed for a car loan is 85% of the on-road price. The banks will also check the monthly income before deciding on the loan amount. Usually, 0.6% of the income is set as the loan limit.
Interest rates on car loans can get affected owing to several factors, including but not limited to your credit score, monthly/annual income, repayment capacity, existing debts, credit history, etc.
You can prevent your application’s rejection by complying with all the eligibility criteria and having a good credit score. Also, make sure to submit documents with accurate details at the time of applying for a car loan.
The loan amount varies from lender to lender. Most car loan providers offer loans up to 90% of the car’s on-road price. However, there are certain lenders that offer 100% financing.
You can make part-prepayments or full repayment, as in foreclosing your car loan. However, some lenders may charge a car loan foreclosure fee. So, make sure to check with your bank regarding additional fees and charges before prepaying your loan.
Covering a major portion of your car’s price with a down payment is always a good practice. That way, you will have a lower amount to apply for, which means you will have lesser debt liability. Also, certain lenders offer lower rates when you make a lump sum down payment.
Having a good credit score always helps. Lenders offer preferential rates to customers having a credit score above 750. So, keep your credit score above the average mark and you may get better deals on car loan interest rates.
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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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