Planning your finances is essential when aiming to own your first car. To make this goal more affordable, consider applying for a car loan. Many financial marketplace offer numerous options, helping you compare lenders and secure favourable terms.
Opting for an extended tenure allows you to repay the loan in manageable instalments. While many institutions offer various loan solutions, it’s crucial to choose the right one by evaluating the borrowing costs, repayment flexibility, and additional features. This approach ensures a smooth and financially sound path to owning your first car.
Car Loan Features To Keep In Mind
Checking the eligibility terms and maximum loan amount can help you compare loans and make the right decision.
Loan-to-value (LTV) Ratio
You can get a car loan of up to a certain percentage of the car’s value. You can even get 100% of the car’s purchase value as financing in some cases. This reduces the amount you need in-hand to purchase the car you want.
Competitive Rate of Interest
Since the car you’re purchasing serves as collateral, you can secure a lower interest rate on your loan. This makes repayment more affordable, especially if you plan your monthly instalments in advance. Additionally, if you have a high credit score, you may qualify for even more competitive rates, further reducing your repayment burden.
Flexibility in Repayment
The car you choose and the loan tenure you select determine your repayment terms. Loan tenures can range from a few months to ten years. A longer tenure typically results in lower EMIs but higher overall interest costs, while a shorter tenure means higher EMIs with lower total interest. Choose wisely to balance your financial comfort and overall costs.
Seamless Application
Along with minimum processing fees, car loans require basic documentation, which makes it easier to apply. You can get instant approval online and enjoy a hassle-free experience.
Factors Affecting Car Loan Eligibility
Several factors influence whether you qualify for this loan and can also impact their terms and overall cost. Understand these factors to give yourself the best chance to get a higher loan amount at a lower interest:
- A high CIBIL/credit score enhances your trustworthiness, increasing your chances of faster approval
- A substantial down payment can improve your chances of speedy loan approval.
- Opting for a shorter loan tenure can result in lower interest rates and may improve your eligibility
- Applying for a lower loan amount can make it easier to secure approval for your car loan
- A stable income reassures lenders of your repayment ability, thereby improving your loan eligibility
Documents To Keep Handy
Here are some documents you need to keep handy when applying for a car loan:
| Document Type | Requirements for Salaried Individuals | Requirements for Self-employed Individuals |
| Identity Proof | Aadhaar cardDriving LicenceVoter IDPassportPAN card | Aadhaar cardVoter IDPassportPAN cardDriving licence |
| Address Proof | Aadhaar cardDriving LicenceFamily card (ration card; must have applicant’s name)Life insurance policyUtility bill (Electricity, water, or telephone; must have applicant’s name)PassportVoter ID | Aadhaar cardDriving licenceVoter IDUtility bill (telephone, electricity, or water)PassportLife insurance policyRation card |
| Age Proof | Aadhaar cardBirth certificateStd. 10th mark sheetSchool transfer certificate | School transfer certificateAadhaar cardMarksheetBirth certificate |
| Proof of Income | Salary slips (for last 3 months)Income tax return document Form 16 Bank statements for 3-6 months | Previous 2 years’ income tax returnsProfit-loss statementAudited balance sheetBank statements for 3-6 months |
| Signature verification | Yes | Yes |
| Vehicle Loan Agreement | Yes | Yes |
| Business Ownership Proof | N/A | Copy of the business registration licenceCopy of GST registration Office address proof (utility/maintenance bill) |
Car Loan Application Process
While the actual process may vary across lenders, here are some steps you may have to take:
- Share Initial Details:
Fill out the loan application form with your personal and income information, the amount you want to borrow, and the tenure. Check all the data to ensure it is accurate to ensure no delay during verification.
- Submit Documents:
Submit the documents required online or in person to prove your eligibility.
- Await Review and Approval
The financial institution reviews your application and documents to ensure you qualify for the loan. They check your:
- Credit score
- Job stability
- Monthly debt obligations
- ID and address
If everything checks out, your loan application is approved.
- Get the Loan Amount
Once approved, the loan amount is sent directly to your bank account. The car you buy becomes the collateral for the loan.
Strategies for Faster Approval
You could take certain steps to ensure that your car loan application is accepted quickly:
- Maintain a high credit score by repaying debt on time
- Check your compatibility with the eligibility requirements
- Provide updated documents and ensure there is no mismatch
- Gather funds needed for the down payment in advance
- Choose the right tenure based on your income
Car loans enable you to take a significant step toward purchasing your first new car. However, you can also get quick financing if you plan to buy a used car. The Bajaj Finance car loan for new and used cars could help you buy your first car with ease. Before you go ahead, compare loan offers from several reputed lenders on financial marketplace. Only apply for a car loan that you qualify for to ensure the best chance of approval.
