CAR LOAN

The Indian consumer never had it better. While incomes have been rising exponentially because of more job opportunities, there is more choice available in every segment. In the good old days, owning an Ambassador car was a status symbol for the rich. Then came Maruti 800, India’s first small car, and now, almost every international car maker has an Indian arm.

And that is not all. With more money on offer, the young rich middle class is willing to upgrade very often. Add to those families which believe that more than one car is a necessity rather than a luxury and we have a whole army of genuine users who are driving the car market. As a result, companies are also dishing out the latest and the best for the Indian market.

However, buying is a tricky decision. You need to budget yourself, choosing the right car for yourself, and know a few tricks to get the best possible deal.

How much car loan can I get?

Banks provide car loans based on the income of the individual. They normally provide loan amounts that are up to 2.5-3 times the annual salary for salaried professionals or 6 times the annual income for self-employed professionals. Apart from income, other factors that decide the maximum eligible amount are the car model, the borrower’s repayment track record, other existing loans, and so on. Banks finance 90-100% of the ex-showroom price of a new car.

The maximum amount financed for used cars vary from 80-90% of the car’s value. If your income is not sufficient to get the loan amount that you want, you could club your Blood relation income along with yours to get a higher loan amount.

Car loan application process

Here is a step-by-step break-up of the car loan application process:

Step 1: Enquiry with a lender:
The first step is to get in touch with a lender. You need to get in touch with as many lenders as possible and get them to make loan offers to you. Then negotiate with them to get the best interest rate. Check if there are any special offers. After you have got all the banks to make their offers to you, select your lender based on the information you have in front of you.

Step 2: Documents Collection
After you finalize your lender, the lender’s direct selling agent will visit you and collect documents supporting proof of income, residence proof, and identity. You may be required to produce copies of IT returns, salary slips, bank statements, passport, driving license, and other relevant documents. These requirements vary from lender to lender.

Step 3: Field Investigation Agency Representative Visit
After submitting the documents, a field investigator will visit your home to double check the facts provided in the documents, such as your place of residence, tenure at work place, and so on. It is essential that you are present during this visit to clarify any query that the investigator might have. Otherwise, the investigator might not get all the facts clearly and could report that the facts you provided do not actually add up – thus forcing the lender to reject your loan application.

Step 4: Loan approved
Once the lender is satisfied with the veracity of your documents, the loan is approved. The lender then disburses the amount through Cheques or demand drafts (DD).

Car loan paper work

Before you drive off in that new car of yours, there are just a few papers that need to be signed. These include the power of attorney which allows the dealer to go to the RTO and register the vehicle for you and transfer of title if you are trading in a vehicle.

Read each document carefully for errors. Once you sign on the dotted line, the deal is done. If something does not feel right, don’t sign. Do not feel pressured or obligated to sign just because of the amount of time invested by the salesperson.

Processing fee structure for new cars