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5 Top Banks for Car Loans

Buying a brand new car is no longer a dream for most – it is in fact a necessity! Some people may choose to buy a car after a promotion or a salary hike while others may opt to do so to provide more comfort to their families or to commute to and from office. Whatever be the reason, buying a car is a substantial expense and as many of us are not able to pay the entire amount out of pocket, we have to shop around for and apply for a car loan. Even if you are rolling in cash, car loans can help you retain your savings for emergencies or immediate financial needs, while allowing you to enjoy the comfort of a brand new car simultaneously.
With nearly all banks coming up with attractive offers, it becomes difficult for people to choose the best lender for their car loan. In the following sections, we have described some key comparison criteria when comparing car loan options provided by different banks. We have also included a short list of 5 leading banks that offer car loans in India.
  • Down Payments: Most banks usually seek a 15% to 20% down payment also known as margin and people usually choose banks that offer the car loan with a lower margin. However, making a larger down payment is usually more beneficial for you in the long term. This will drastically reduce your payable EMI and you may also be able to negotiate better (i.e. lower) loan interest rates.
 To illustrate, if you make a down payment of 40% on a car of Rs. 7 lakh (i.e. you pay Rs. 2.8 lakh), your EMI for a car loan at 12.5% and tenure of 5 years will come to Rs. 9,449/month which  translated to a total interest payable of Rs. 1,46,948 over the whole loan tenure. Alternately, if you make only a 15% down payment, then, other things being the same (i.e. car price, interest and tenure) your EMI will be Rs. 13,386 and total interest payment will be Rs. 2,08,176 over the 5 year loan tenure, which is substantially higher.
  • Interest Rates and Tenure – This is a key factor you need to understand before you apply for any loan, including a car loan. Car loans are currently offered at floating rates however, different banks offer the same loan at different rates of interest. A lower interest rate is preferable as compared to a higher interest rate, however, in case of a longer tenure at a low interest rate, your interest outgo will be significantly higher.
  • Credit History: You must have a good credit history to be eligible for a car loan. The best way to analyse your credit history is to check your credit score. If the score is equal or above 750 then there is a good chance that your car loan will be approved.
Based on the above criteria, the following is our list of top 5 banks for car loans in India*
sbi-car-loan

1. State Bank of India

SBI offers you the best deal for financing your new car. Lowest interest rates, lowest EMI,nminimal paperwork and quick disbursement.

Features:

  • Lowest Interest Rates & EMI;
  • Longest Repayment Tenure (7 years);
  • Financing on ‘On-Road price’:
  • Interest calculated on Daily Reducing Balance;
  • No Pre-Payment Penalty or Foreclosure Charges;
  • No Advance EMI

2. Punjab National Bank

PNB offer Up to 85% of on-road price of car. No prepayment charges in Floating Rate, 2% on amount prepaid in Fixed Rate.

Eligibility:

Minimum net monthly salary / pension/ income – Rs.20000/-.

Income of Parent(s)/Spouse/ Earning Children can be added for determining loan amount/eligibility. However, out of above income of only one person can be added and he/she will stand as a co-borrower.

Prepayment Charges:

Floating Rate: NO pre-payment charges.

Fixed rate: @2% on the outstanding pre-paid. However, no prepayment charges to be levied :-

Where the loans are prepaid by the borrowers from their own sources.

Where the borrower shift to other bank within 30 days from the date of upward revision in the rate of interest or change in other terms of sanction.

3. Axis Bank

Car loan interest rate is one of the prime considerations while seeking car finance. Axis bank offers the most attractive car loan interest rate in private sector banks. Axis Bank provide Minimum – Rs. 1,00,000 and Maximum – Upto 85% on-road funding.

Eligibility

  • 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
  • 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

4. ICICI Bank

ICICI Bank offers car loans up to 100% ex-showroom price of the car, with attractive interest rates and up to 7 years tenure. ICICI Bank offer car loans for New Car, Pre-Owned car and even a loan against car.

Features:

  • Loan up to 100% of ex-showroom price
  • Loan tenure up to 7 years
  • Attractive rate of interest
  • Easy documentation
  • Insurance cover for Loan Liability available, repayable along with EM

5. HDFC Bank

HDFC Bank can offer a car loan for upto 100% of the value with attractive interest rates and up to 7 years tenure.

Features

  • Get up to 100% finance on your favourite car.**
  • Avail loans for the widest range of cars and multi-utility vehicles in India.
  • Experience flexible loan repayment tenures – from 12 months up to 84 months.
  • Avail a car loan of up to 6 times your yearly income.
  • Car Loan eligibility in a minute. Approval of Car loan in 30 minutes.
  • Pocket-friendly EMI repayment options.
  • Fastrack your loan by choosing the plan that is right for you.
  • Reasonable interest rates.
  • Swift and customer-friendly documentation process.
  • Unique schemes for existing HDFC bank customers.
  • Easy loans up to Rs. 1.5 Cr.

Eligibility and Documentation of New Car Loans

Are you a salaried employee?

This category includes salaried doctors, CAs, employees of select public and private limited companies, government sector employees such as public sector undertakings and central, state and local bodies.

You should:

  • Minimum age for Salaried is 21 years (at time of loan application) and <=60 (at the end of the loan tenure)
  • Have had a job for at least 2 years, and a minimum of 1 year with your current employer
  • Earn at least an income of Rs. 1,80,000 annually, including the income of your spouse/Co-applicant.
  • Have a tele-phone/ post paid mobile

Documents you will need to submit:

  • Proof of Identity: Passport copy, PAN Card, Voters Id card, driving licence( Laminated, Recent, Legible)
  • Income Proof: Latest salary slip with form 16.
  • Address Proof: Ration card/Driving licence/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card.
  • Bank Statement:Last 6 months

Are you a self employed individual (Sole Proprietorship)?

This category includes self-employed sole proprietors in the business of manufacturing, trading or services.

You should:

  • Minimum age for Self Employed is 21 years (at the time of loan application) and <=65 (at the end of the loan tenure)
  • Be in business for at least 2 years
  • Earn at least Rs. 60,000 per annum if you are looking to buy a standard car and at least Rs. 1,00,000 per annum for mid-sized and premium cars.
  • Have a telephone at residence / Post Paid mobile connection

Documents you will need to submit:

  • Proof of Identity: Passport copy, PAN Card, Voters Id car, driving licence( Laminated, Recent, Legible)
  • Income Proof: Latest ITR
  • Address Proof: Ration card/Driving licence/Voters card/passport copy/telephone bill/ electricity bill/Life insurance policy PAN Card
  • Bank Statement:Last 6 months

Are you self employed (Partnership Firms)?

This category includes self-employed partners in the business of manufacturing, trading or services.

You should:

  • Earn at least Rs. 60,000 per annum if you are looking to buy a standard car and at least Rs. 1,50,000 lakh/anum for car loan
  • Have a minimum turnover of Rs. 4,50,000 per annum
  • Have a landline at your office and residence.

Documents you will need to submit:

  • Proof of Identity: NA
  • Income Proof: Audited balance sheet, Profit & Loss Account for latest two years and the latest 2 years IT returns of the company
  • Address Proof: Telephone Bill/Electricity Bill/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate
  • Bank Statement:Last 6 months

Are you self employed (Private Limited Companies)?

If you own a private company in the business of manufacturing, trading or services, this is for you.

You should:

  • Earn at least Rs. 60,000 per annum if you are looking to buy a standard car and at least Rs. 1,50,000 per annum for mid-sized and premium cars
  • Have a minimum turnover of Rs. 4,50,000 per annum
  • Have a landline at office

Documents you will need to submit:

  • Proof of Identity: NA
  • Income Proof: Audited balance sheet, Profit & Loss Account for latest two years and the latest 2 years IT returns of the company
  • Address Proof: Telephone Bill/Electricity Bill/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate
  • Bank Statement:Last 6 months

Are you self employed (Public Limited Companies)?

If you are a director in a public limited company in the business of manufacturing, trading or services, this is for you.

You should:

  • Earn at least Rs. 60,000 per annum if you are looking to buy a standard car and at least Rs. 1,50,000 per annum for mid-sized and premium cars
  • Have a minimum turnover of Rs. 4,50,000 per annum
  • Have a landline at office

Documents you will need to submit:

  • Proof of Identity: NA
  • Income Proof: Audited balance sheet, Profit & Loss Account for latest two years
  • Address Proof: Telephone Bill/Electricity Bill/Shop & Establishment Act certificate/SSI registered certificate/Sales Tax certificate
  • Bank Statement:Last 6 months
Bank Interest Rates Loan Amount Processing Fees Foreclosure Charges Tenure
SBI 9.65% onwards Up to 85% of on-road price Nil No foreclosure charges Up to 7 years
PNB 9.40% to 9.75% Up to 85% of on-road price 1% of loan amount subject to max. of Rs. 6,000
  • Floating Rate: No prepayment charges
  • Fixed Rate: 2% on amount prepaid
Up to 7 Years
Axis Bank 9.5% – 15% Rs. 1 lakh onwards Up to Rs. 5,500 10% of the principal outstanding till 6 months and 5% thereafter. Two-part payments allowed every financial year Up to 7 Years
ICICI Bank 10.75% – 12.75% Up to 100% of ex-showroom price Up to Rs. 5,000
  • Loans less than 6 months: Not allowed
  • After 1 year: 6%
  • After 2 years: 5%
  • After 3 years: 3%
Up to 7 Years
HDFC Bank 11.50% – 13.75% Up to 100% of ex-showroom price Up to Rs. 5,150
  • Loans less than 6 months: Not allowed
  • After 1 year: 6%
  • After 2 years: 5%
  • After 3 years: 3%
Up to 7 years