Car Loan

A car loan is a secured financing product offered by banks and NBFCs that enables individuals to purchase vehicles by borrowing funds and repaying them over a specified period. As asset-backed loans, the vehicle serves as collateral, making this one of the most accessible forms of consumer financing in India.

Key Features

Loan Amount & LTV

Most lenders offer car loans up to 80-90% of the on-road price.

Example: For a car costing Rs. 10 Lakh, you can borrow up to Rs. 9 Lakh.
Down Payment: Minimum 10-20% required.

Tenure & Repayment

Flexible repayment options designed to fit your budget:

Standard: 5 Years (60 months).
Extended: Up to 7-10 years for lower EMIs.
Prepayment: Floating-rate loans typically allow penalty-free prepayment.

Types of Car Loans

New Car Loans

Financing for brand-new vehicles directly from dealerships. Offers lower interest rates (7.2-11%) and longer tenure options of up to 7-10 years.

Used Car Loans

For pre-owned vehicles (1-15 years old). Maximum amounts up to Rs. 10 Lakh. Interest rates are typically higher due to depreciation risk.

EV Loans

Specialized loans for Electric Vehicles offering preferential interest rates and significant tax benefits under Section 80EEB.

Commercial Vehicle Loans

Financing for taxis, auto-rickshaws, and transport vehicles, often coming with specific tax benefits for business-related expenses.

Eligibility Criteria

To qualify, borrowers must meet specific age, income, and credit requirements.

Criteria	Requirement
Age	18-21 years (Minimum) to 60-65 years (Maturity).
Citizenship	Indian Citizen or Resident (NRIs may face restrictions).
Employment	Salaried (Employment proof required) or Self-Employed (Business continuity proof).
Minimum Income	Rs. 3 Lakh per annum (General threshold) or Rs. 15k-25k monthly.
Residence	Minimum 1 year at current address.

Credit Score Impact

CIBIL Score Requirements

Critical Factor

Preferred Score

750+

Qualifies for the lowest interest rates and fastest approval.

Minimum Score

650 - 700

Accepted by some lenders, but scores below 650 may face rejection or higher rates.

Documentation Checklist

KYC & Identity

PAN Card (Mandatory)
Aadhaar Card / Passport / Voter ID
Driving License
2-4 Recent Photographs

For Salaried

Latest 3 months salary slips
Form 16 (Past 2 years)
6 months bank statements
Employment confirmation/ID Card

For Self-Employed

ITR for past 2 years
Audited Balance Sheet & P&L
Business Registration Proof
Office Address Proof & Utility Bills

Vehicle Documents

Sales Invoice / Quotation
Insurance Quotation
Used Cars: RC Copy & Transfer Docs
Used Cars: Valuation/Condition Report

Interest Rates (Dec 2025)

Interest rates vary based on credit score, vehicle type, and lender. New cars generally attract lower rates (7.25-10%) compared to used cars (10-15%).

Public Sector Banks

Bank	Interest Rate Range	EMI per Lakh (5 Yrs)
Union Bank of India	7.80% - 9.70%	Rs. 10,090 - Rs. 10,550
State Bank of India (SBI)	8.65% - 9.70%	Rs. 1,591 - Rs. 1,645
Bank of Baroda	8.70% - 11.10%	Rs. 1,594 - Rs. 1,718
Punjab National Bank	8.80% - 9.60%	Rs. 1,599 - Rs. 1,640

Private Sector Banks

Bank	Interest Rate Range	EMI per Lakh (5 Yrs)
HDFC Bank	8.95% - 11.00%	Rs. 1,606 - Rs. 1,712
ICICI Bank	8.95% - 11.25%	Rs. 1,606 - Rs. 1,725
Axis Bank	9.15% - 13.80%	Rs. 1,617 - Rs. 1,863

Processing Fees: Typically range from 0.5% to 2.5% of the loan amount depending on the bank.

Tax Saving Opportunities

1. Electric Vehicle (EV) Benefit - Section 80EEB

Individual Taxpayers

Individual taxpayers purchasing EVs can claim deductions on interest payments under Section 80EEB.

Max Deduction

Rs. 1.5 Lakh

Per financial year on interest paid.

Eligibility

Loan from Bank/NBFC
Old Tax Regime Only
Personal or Business use

Example: For interest paid of Rs. 1.8 Lakh, you claim Rs. 1.5 Lakh deduction. At 30% tax slab, you save Rs. 45,000 annually.

2. Business Use (Sec 80C)

Self-employed professionals can deduct interest paid on car loans used for business purposes.

Interest Limit: Up to Rs. 1 Lakh per annum.
Condition: Must prove exclusive business usage.

3. Depreciation Allowance

Business vehicles are depreciating assets allowing further deductions.

Rate: 15% per annum on vehicle cost.
Combined Benefit: Interest + Depreciation significantly lowers taxable income.

Comparison & Expert Tips

Car Loan vs. Personal Loan

Aspect	Car Loan	Personal Loan
Interest Rate	7.2% - 12%	9% - 17%
Collateral	Vehicle (Mandatory)	None (Unsecured)
Tenure	1 - 7 Years	1 - 5 Years
Tax Benefit	Yes (EVs)	Limited

10 Steps to Optimize Your Loan

Check Credit Score

Maintain a score above 750 for best rates. Clear existing dues 6 months prior.

Increase Down Payment

Pay 20-30% upfront instead of the minimum 10% to reduce total interest burden.

Choose Tenure Wisely

A 5-year tenure balances manageable EMI with reasonable total interest costs.

Pre-Approved Loans

Get pre-approval letters to improve negotiation power with car dealers.

Compare Lenders: Check rates across 3-4 banks before applying.
Resale Value: Choose brands (Maruti, Hyundai, etc.) with high resale value for better LTV.
Automate EMIs: Avoid penalties (2-4%) by setting up auto-debit.

Floating Rates: Opt for floating rates (start 0.5-1.5% lower) to allow penalty-free prepayment.
Prepayments: Use bonuses to pay 10-20% of principal annually to slash tenure.
Used Car Option: Higher interest but lower principal results in faster repayment.

Loan Application Form

Start your journey with us today. Fill out the details below.

First Name First name is required.

Last Name Last name is required.

Email Address Please enter a valid email (e.g., example@domain.com)

Phone Number (10 digits) Please enter a 10-digit phone number.

Select Loan Category A loan category must be selected.

Remarks (Max 250 chars)

EMI Calculator

Monthly EMI ₹0

Proudly Associated With Popular Banks

Proudly Associated With Popular NBFCs

Note: All logos and trademarks are the intellectual property of their respective owners.

Instant Support! Lifelong Trust!