Car Loan

Car loan is a type of loan that helps you buy that dream car you have been thinking of.


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Today, the moment one starts earning, (s)he dreams of owning a car, be it new or a pre-owned one.

Car loan can be availed with easy documentation and with a higher loan margin, provided the minimum requirement of availing a loan is fulfilled. Some banks offer car loan at special discounts and on competitive interest rates.

Cars are a luxury as well as a basic mode of transportation for many. If you wish to buy a car to fulfill your dreams and you feel that finance is an issue, fret not. You can now drive home your dream machine with a low interest rate. Most of the leading banks in India, offer you competitive rates by providing car loan. All you need to do is make a minimum amount of down payment and then payback the car loan via EMIs that ultimately helps in reducing your loan burden. But, before you avail for a car loan, make an informed decision based on the prepayment charges, processing fees, rate of interest that your bank charges, amount of loan that you avail as well as your credit history.

Types of Car Loans

Secured Car Loan

Secured Car Loan

In this type of car loan, your car is used as a collateral for the loan. In case you fail to repay your car loan, the bank will have the authority to repossess the car and then sell the same in order to get the money back.

Unsecured Car Loan

Unsecured Car Loan

In this type of car loan, there is no collateral required. Therefore, you need not provide your car as a security for obtaining a loan. You will be sanctioned a smaller quantum of loan as compared to a new car loan. However, this would mostly be at a higher interest rate.

Step by Step procedure for applying Car loan ..

Mentioned below is the step-by-step procedure to apply for car loan online:

  • Step 1 – Confirm eligibility: Use the EMI car loan calculator for deciding the amount you would like to borrow and the tenure for the same. Fill in the car loan online application form furnishing your details and then checking the offer that the lender can provide you.  

  • Step 2 – Your offer: You will be offered an exclusive offer based on the details you provided in Step 1. It will also showcase the interest amount, tenure and loan amount

  • Step 3 – Duly filled in application: Fill-up an easy online car loan application form providing your professional and personal details. It will merely take only 5 minutes to fill up the application form completely.

  • Step 4 – Uploading the documents: Now all you need to do is upload the documents required and the car loan amount that you have requested for, will get credited to your bank account.

Mentioned below is the step-by-step procedure to apply for car loan offline:

  • Visit any nearest bank branch
  • Fill up the offline car loan application form
  • Attach photocopies of the documents requested
  • Submit the same at the branch

Some of the frequently asked questions about Car Loans

Mentioned below are the features of a Car loan:

  • Offers loan facility for almost all range of cars as well as multi-utility vehicles in India
  • Minimum and hassle free documentation
  • It is best to opt for a secured car loan for the secure future.
  • It is important to not zero down on a particular car loan considering only the interest rates of the loans. Other parameters should also be compared
  • Flexible enough for EMIs ranging from 12 to 84 months for repayment
  • Lowest interest rates
  • Flexible for repaying the loan amount with easy EMIs
  • Offers schemes that are flexible schemes
  • Offers quick car loan processing


Mentioned below is the list of documentation that is needed for application of Car loan:

  • Duly filled application form
  • PAN card
  • Latest photograph in the prescribed size
  • Passbook attested by the branch manager
  • Last three months’ pay slips
  • Latest statement of income tax returns
  • Last six months Bank account statement
  • Business ownership documents if the applicant is self-employed.

Valid identity proof:

  • Aadhaar card
  • Voter’s ID
  • Valid ID card issued by your employer
  • Valid passport
  • Valid driving license
  • PAN card

Valid address proof:

  • Telephone bills
  • Ration card
  • Property tax assessment
  • Gas connection bills
  • Electricity supply bills
  • Water supply bills
  • Makes purchasing a car hassle-free: Car loan makes it easier for you to buy your dream machine. You may also come across lenders who are willing to lend you up to 100% of the ex-showroom rate of the car. 
  • Loan availability for second hand or pre-owned car: You can also avail car loan facility on pre-owned or used cars. However, remember that the rate of interest on used cars would be higher. Here, the loan to value (LTV) ratio will also ultimately be lower as compared to a new car loan
  • Mode of payment can be opted as per your choice: For repaying the car loan amount, you may choose your own method of payment. But, it is important that the repayment should be made via EMIs only. EMIs can be paid either by cash or ECS or through postdated cheques according to your convenience.
  • Interest rate flexibility: You may certainly opt for either fixed or floating interest rates.
  • Negotiation on interest rates: You can also negotiate on car loan interest rates. Lenders do negotiate on car loans. However, this may only be possible in case you have a good credit score.
  • Flexible with regards to select loan tenure: You may opt for a loan duration of maximum 5 to 7 years depending on your lender’s terms and conditions.
  • No requirement of Collateral: You need not furnish any collateral for car loan since the car bought through the loan itself would be pledged as the security for the car loan. The lender would take hold of your car for liquidating and recovering the loan if you fail to repay.

A car loan EMI would depend on the factors mentioned below:

  • Total amount of loan required
  • Interest rate
  • Loan duration

Formula to calculate car loan EMI is:

E =  p*r (1+r)^n 


Wherein E means the EMI payable

p denotes the Car loan Principal Amount

r denotes the interest rate value which is computed every month

n is the loan tenure in the form of months.

Eligibility Criteria ..

Mentioned below is the eligibility criteria to apply for Car loans in India.

• You must be an Indian citizen
• You must be at least 21 years old
• You must hold a valid PAN card
• You must be for minimum one year in case you are salaried
• You must be engaged in your business for at least a year, in case of self-employed
• You must have a source of income that is constant either by way of salary or business.

Your Policy

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Calculate your Needs?

Many questions may come in your mind before deciding on the Loan. ‘How much Loan I would need, how many years I shall invest for, what would be the EMI’s, etc. Loans Calculators are life-savers. They help you know your needs and assess the potential costs. Grey Font brings to you various Loans Calculators and interactive tools to help you calculate your needs. In order to get better results, ensure to enter a value in all the possible fields.


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