How to Apply for a Car Loan?

"Learn the steps to apply for a car loan online, and secure the best car loan interest rates. Discover how to easily get a car loan and hit the road hassle-free."

msme-loan

6 mins read

Published: 8 September 2023

Updated: 8 December 2023

Many of us want to own a car but lack finance, On searching we found a possible solution for a car loan. But how to apply for a car loan is the major question that a person usually ask themselves. This article will answer this question and ease the process of car loans. With a few clicks, you will be able to apply for a car loan and get it disbursed.

A Car Loan is a secured loan that banks and the NBFCs provide to borrowers who want to buy a car. In simple terms, a car loan is a financial arrangement where a lender provides funds to an individual to purchase a vehicle.

The borrower agrees to repay the loan amount, typically with interest, over a specified period. Car loans can be secured, with the vehicle itself serving as collateral, or unsecured, based on the borrower's creditworthiness. These loans offer people the opportunity to acquire a car when they may not have the cash upfront. Borrowers make regular payments, usually in monthly installments, until the loan is paid off. Failure to meet the repayment terms can result in the lender repossessing the vehicle.

Benefits of Applying for a Car Loan

  • Car loans offer several benefits. Firstly, they enable individuals to purchase a car without a large upfront payment, making it affordable.

  • Car loans often come with competitive interest rates, allowing borrowers to spread the cost over time. Additionally, making timely payments on a car loan can improve one's credit score.

  • Car loans are flexible, with varying tenure options to suit different budgets. They also provide the option for refinancing to secure better terms.

  • Some lenders offer special deals and promotions, reducing the overall cost of owning a car and making car loans attractive.

Advantages of Apply Online for Car Loan

Apply Online for Car Loan and avail of multiple benefits that financial aid offers to borrowers. Drive your dream car without worrying about the finances in hand.

1. Convenience: Applying online is quick and convenient, allowing you to complete the process from the comfort of your home.

2. Time-saving: It saves time compared to visiting physical bank branches, as you can submit documents electronically and receive quicker responses.

3. Comparison Shopping: Online platforms enable you to easily compare car loan offers from multiple lenders, helping you find the best rates and terms.

4. Accessibility: You can apply at any time, 24/7, making it accessible outside of regular banking hours.

5. Paperless: Many online applications are paperless, reducing paperwork and environmental impact.

6. Transparency: Online platforms often provide clear information about loan terms and eligibility criteria, enhancing transparency.

7. Faster Approval: Online applications often result in faster loan approvals and disbursals.

Eligibility to Apply for a Car Loan

Eligibility criteria for a car loan can vary between lenders, but generally, the following factors are considered when applying for a car loan:

1. Age: You typically need to be at least 18 years old to apply for a car loan, although some lenders may have higher age requirements.

2. Income: Lenders assess your income to determine your ability to repay the loan. A stable source of income is usually required.

3. Credit Score: A good credit score demonstrates your creditworthiness and can affect loan approval and interest rates. Lenders often have minimum credit score requirements.

4. Employment History: A stable job or business history can positively impact your loan application.

5. Down Payment: Lenders may require a down payment, which is a percentage of the car's purchase price. The amount varies but can affect eligibility.

6. Loan Amount: The loan amount requested and the car's value are considered in the approval process.

7. Debt-to-Income Ratio: Lenders evaluate your existing debts in relation to your income to assess your ability to handle additional debt.

8. Citizenship/Residency: Some lenders may require applicants to be citizens or residents of the country where they're applying for a car loan.

9. Documentation: You'll need to provide necessary documents, such as proof of identity, address, income, and employment.

Documents required for taking a Car Loan

When applying for a car loan, you typically need to provide the following documents:

1. Identity Proof: Government-issued identification such as a passport, driver's license, Aadhar card, or voter ID.

2. Address Proof: Documents like a utility bill, rental agreement, or bank statement that verify your current address.

3. Income Proof: Lenders require evidence of your income, which can include:

  • Salary slips for the last few months.

  • Bank statements showing regular income deposits.

  • Income tax returns (ITR) or Form 16 for salaried individuals.

  • Business financial statements and ITR for self-employed individuals.

4. Employment Proof: For salaried individuals, you may need to provide an employment certificate from your employer.

5. Business Proof: If you are self-employed, you might need to furnish business registration documents, GST returns, or other business-related records.

6. Car Quotation: A copy of the pro forma invoice or quotation from the car dealership specifying the vehicle's details and price.

7. Bank Statements: Some lenders may request your bank statements for the past few months to assess your financial stability.

8. Passport-sized Photographs: Usually, a few passport-sized photographs are required for documentation.

9. Duly Filled Application Form: Complete the lender's car loan application form accurately.

How to Apply for a Car Loan?

  • Apply online for a Car Loan by visiting the website of My Mudra.

  • Go to the section of Secure Loan and click on Car Loan.

  • Click on the Apply Now Button and start filling in your form.

  • Complete the form and click on Submit.

  • You will receive a call from our executive explaining the process of a Car Loan

  • Get your Car Loan Approved with minimal documentation and lower interest rates from top banks or NBFCs through My Mudra.

The Interest Rate for Car Loan

Mentioned below are the top banks and NBFCs offering you a Car Loan

Name of the Lender

Interest Rate (P.A.)

State Bank of India

8.60% p.a. onwards

Bank of Baroda

8.70% p.a. onwards

Union Bank of India

8.8% p.a. onwards

HDFC Bank

Starting from 8.75% (Rack Interest)

Federal Bank

11.00% p.a. onwards

Axis Bank

8.55% p.a. onwards

Canara Bank

9.15% p.a. onwards

IDBI Bank

8.75% p.a. onwards (floating)

9.20% p.a. onwards (fixed)

Conclusion

Apply Online for a Car Loan through My Mudra and get your loan approved and disbursed quickly. My Mudra will help you in driving your own car. Get a car without worrying about the expenses. Finance your car with us today. Get all the relevant details on how to get a car loan through this article.

Also read: Is Car Loan Secured or Unsecured?

android apple
facebook instagram linkedin