Planning to buy a car?
Is yes, then this article will help you to understand the different 2 main types of car loans available in the market, the eligibility criteria and documentation required to avail the loan.
Types of Car Loans
Car loans can be mainly classified into 2 types: 1) New Car Loan and 2) Pre-Owned Car Loan.
New Car Loan – All eligible customers can avail for a new car loan when purchasing his set of new wheels. The car loans could range from a minimum of Rs.100,000 to max 80% value of the car or even 100% depending on the bank or finance company.
One can find out if you are eligible for a New Car Loan and the maximum limit using the Car Loan Emi Calculator which most banks and finance companies offer on their company website.
The eligibility for a New Car Loan/ Pre-owned Car Loan depends on the type individual if he or she is a Salaried, Self-employed, Salary customers etc.
Below are the details for each individual type.
Salaried individuals who are eligible for a New Car Loan/ Pre-owned Car Loan
- Minimum 21 years of age
- Maximum 70 years of age at maturity (conditions apply)
- Minimum Net Annual Salary of Rs. 2,40,000 p.a. for all approved car models
- Income eligibility based on latest salary slip and Form 16
- Minimum of 1-year continuous employment
Self-employed individuals who are eligible for a New Car Loan/ Pre-owned Car Loan
- Minimum 18 years of age
- Maximum 75 years of age at loan maturity
- Minimum Net Annual Business income of Rs. 1,80,000 p.a. for selected models and Rs. 2,00,000 p.a. for others
- Income eligibility based on latest Income Tax Returns
- Minimum 3 years of employment in the same line of business
Self-employed non-individuals who are eligible for a New Car Loan/ Pre-owned Car Loan
- Minimum Net Annual Business income or Rs. 1,80,000 p.a. for selected models and Rs. 2,00,000 p.a. for others
- Income eligibility based on latest 2 years Income Tax Returns and audited financials of 2 years along with computation of income
- Minimum 3 years of employment in the same line of business
Priority / Wealth customers eligible for a New Car Loan
- Customers with a vintage of 6 months
- A minimum Average Quarterly Balance (AQB) as below:
- An AQB of Rs. 1 Lakh for last 2 completed quarters. AQB requirement to be met for both the quarters
- Maximum loan amount restricted to 3 times the AQB in the last 2 quarters
Salary customers eligible for a New Car Loan
- Customers who have a Salary A/c with Axis Bank since the past 3 months
- Those who work with the following
organisations:
- Public Limited and Private Limited Companies
- MNCs
- Permanent employees of State / Central Government
- Permanent employees of Public Sector Undertakings
- Permanent employees of reputed schools / colleges
- Other factors
- Minimum 21 years of age
- Maximum 70 years of age at loan maturity
- Minimum Net Annual Salary of Rs. 2,40,000 p.a.
- Income eligibility base on latest salary slip and Form 16
- Minimum 1 year of continuous employment
The documents required for availing the car loan
- Age proof
- ID proof
- Application form
- Photograph
- Residence proof
- Income proof
- Bank statement
- Signature verification proof
- Pro-forma Invoice or Rate List (for new car loan only)
Additional documents required in case of Pre-Owned car loan
- Car Valuation report
- RC copy in case of refinance
- Post-sanction, Pre-disbursement Documentation:
- Loan Agreement duly signed along with RTO set
- Standing Instructions (SI) Request / ECS Form/Post Date Cheques (PDCs) – Security Cheques are required for SI and ECS
Tips & Tricks – How to manage your car Loan
Ensure you set out a budget. Make sure your car loan EMI is not more than 15% of your monthly net income. Keep money for your daily and necessary expenditure, keeping some money aside for unforeseen emergencies.
Pay a higher down payment. Paying a higher initial amount helps to reduce debt long term and saving money by paying lower EMI’s and interest.
Choose a Shorter Tenure. Select a lower tenure may be 3-5 years as over 7 years. This may mean a higher EMI, but also lower rate of interest.
Never miss an EMI. Disciplined payment of the EMI helps to avoid any late charges and also facilitates a healthy credit score.
