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Procedure: How to Apply for Car Loan
February 06 , 2013
  1. Car loans are available for new car as well as for used car not more than 3-5 years old. In case of new cars the dealer would be more than eager to offer you loans from banks he has tie-ups with. Nevertheless give it an attempt by yourself too; visit a few banks to bag the best deal.
  2. These days it is possible to go the other way round- first get a loan approved and then visit a dealer with whom the bank has tied up. Lending rates also depend on discounts given by manufacturers and dealers.
  3. Interest rate on new cars is significantly lower than on used cars. Car loans tenure varies from 5-7 years. You would be offered loan for about 3-6 times your annual income.
  4. You might get to borrow up to 90% of the road price of a new vehicle and up to 80% in case of a new vehicle. Some banks offer lower interest rate if you can offer liquid securities for collateral. Try this one.
  1. Car loans are risky assets for banks. Banks have minimum and maximum age restriction for borrowers. It ranges between 21 years and 65 years. You should have been employed since the last 2 years and have been with the current firm for at least 1 year. Self employed individuals should have been in business for at least 3 years. Your annual income should exceed Rs 2 lakhs (may be higher or lower with different banks).
  2. Application forms can be filled and submitted online for many banks. If that is not possible fill in the form and submit it along with photographs and supporting documents such as identity proof, address proof, income proof, age proof and signature verification proof.
  3. If all goes well and the lender is satisfied about your repayment capacity and credit history your loan will be sanctioned in a day's time.
  4. But heed to a piece of advice- avoid car loans. At the end of the loan term you will be left with an old car for which you paid much more than its actual price through EMIs. Wait and accumulate the amount as much as you can and borrow a small portion for a short period.
  1. Submit the signed loan agreement along with RTO set of documents. Hand over Post Dated Cheque or ECS form or Standing Instructions to the bank.
  2. Your car will be liened. Once the loan is fully paid lien will be cancelled and your car will be totally yours to use (or sell!)

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