Planning to get a new car loan and have questions about the process? You have landed on the right page. Here are answered to the top 10 frequently asked questions (FAQs) about the new car loans in India.
Also Read: Top 10 SUVs With the Lowest Monthly EMI in India
What CIBIL score is required to get a car loan?
A higher CIBIL score improves your chances of loan approval, and places you in a strong position to negotiate a more competitive interest rate. Generally, a CIBIL score of 750 or above is considered strong when applying for car finance. Lenders also evaluate other factors such as income, existing EMIs, loan amount, employment stability and repayment history.
| CIBIL Score | Car Loan Position |
| 800+ | Excellent |
| 750-799 | Very Good |
| 700-749 | Acceptable, subject to lender criteria |
| 650-699 | Approval Possible, but rate might be higher |
| Below 650 | Approval could be difficult |
How much car loan can I get on a Rs 30,000 salary?
There is no fixed loan amount for someone earning a monthly salary of Rs 30,000. Your loan eligibility depends on existing EMIs, CIBIL score, interest rate, lender’s criteria, repayment capacity and several other aspects. If you are already paying EMIs toward another loan or credit obligation, your eligible amount for a new car loan will be lower.
How much car loan can I get on a Rs 50,000 salary?
Compared to a Rs 30,000 salary, earning Rs 50,000 per month indicates borrower’s higher repayment capacity. However, the actual eligible loan amount will depend heavily on the lender’s assessment.
How is car loan EMI calculated?
A car loan EMI is calculated on the basis of three major factors – the principal amount, the monthly interest rate and the loan tenure: EMI = P x P x (1+R)ⁿ / [(1+R)ⁿ – 1]. During the initial years of the loan, a larger portion of your EMI goes towards interest. As the outstanding principal decreases over time, the interest component reduces accordingly.
What is the current car loan interest rate in India?
Car loan interest rates depend on multiple factors such as lender, your credit score, income profile, loan tenure and the vehicle model. In India, interest rates for car loans generally start around 8.5% to 9% per annum, with actual offers vary by lender and borrower profile.
How much down payment is required for a car loan?
The down payment depends on the lender, the vehicle and the bank’s loan-to-value (LTV) policy. The higher down payment reduces the total loan amount required, resulting in lower monthly EMI.
What documents are required to get a car loan?
Usually requested documents include Aadhaar or any other accepted identity or address proof, PAN card, passport size photographs, salary slips, proof of income, bank statements, business or employment proof, residence proof and additional KYC or financial documents.
What is the maximum tenure for a car loan?
The maximum tenure duration depends on the lender and the specific car loan product. With a longer tenure, you get lower monthly EMI. This means, you end up paying more total interest over time. If you can afford the higher EMIs, a shorter tenure will reduce the overall cost of borrowing.
Can I get a car loan with a low CIBIL score?
Yes, it’s possible to secure a car loan with a low CIBIL score. However, approval could be more challenging and the interest rate will be higher.
Can I prepay or foreclose my car loan before the tenure ends?
Yes, car loans can be prepaid partially or foreclosed entirely before the tenure ends. However, the applicable charges and conditions depend on the lender and the type of interest rate chosen.