Buying your dream car is a click away!

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.