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- What is the maximum amount of loan that I am eligible for?Nowadays, there are many financial entities that offer loan up to 90 percent of the car value, though the final loan amount may differ with each entity. The loan amount that you get depends upon a number of factors, like the price of vehicle, body type, brand and model, resale value, etc. Few agencies even offer a car loan on 100 percent of the car cost.
- What documents do I need to provide and how long does the loan processing take?At the time of applying for car loan, you are required to submit your identity, income and residential proofs. Once these documents are verified, it takes around 3-7 days in processing and sanctioning the loan.
- Can I choose the type of rate of interest on my loan?In most of the banks, you get to pick from two types of rate of interest – Fixed and Floating. You need to confirm this beforehand whether your bank provides the one that you want.
- What is the common tenure for car loan?Generally, car loan tenures range from 1-5 years and some banks offer tenure of up to 7 years. Short tenure means you will have to pay higher EMI and long tenure means lesser EMI value.
- What is CIBIL score?CIBIL or the Credit Information Bureau (India) Limited is a Credit Information Company that collects information of an individual’s loan and credit card payment details, and provides a credit score based on the same. The financial and credit institutions use this score to evaluate loan applications. Credit or CIBIL scores lie in the range of 300 to 900, with 750 being an average score that is most commonly accepted by banks for accepting loan applications.
- What CIBIL/credit score is considered to be safe for car loan?There is no such perfect score declared by banks or any such credit institution. However, an applicant with a score above 600 may not find too many hurdles while applying for car loan. A score of 750 is commonly readily accepted by the banks and they are quite willing to offer credit services to such applicants. This is because a score of 750 or above means that you have been a regular payer with your previous loans and will be able to repay your loan amount without being a defaulter.
- In which cases does a loan application get rejected?If you have a bad credit score in your bank account, then there is a high possibility of your loan application getting rejected. This can also happen if you have been a defaulter in any way in your past loans. If you are applying for loan for the first time, then the bank will consider your assets, income, company, etc.
- What are the modes to pay EMIs? What to do in case of pre-payment?You can either request the bank to auto-debit the monthly EMI amount from your bank account through ECS (Electronic Clearing System) or opt to pay the EMIs through post-dated cheques. In case of car loans, you can pre-pay the entire loan amount after 6 months to 1 year. You cannot make part payments in car loans. However, since these rules vary with the banks, it is important that check with your bank beforehand.
- What happens if I get late in paying the EMI?It is important that you pay all your EMIs on time. Some banks allow you to pay the EMI after due date, along with a late payment fee. However, this can happen only once or twice. Beyond that, you may be considered as a defaulter. In that case, the bank may even take over your vehicle. Also, this highly affects your credit score and reduces your chances of getting any kind of loan approved in future.
- Why do I need a good credit score to get my loan sanctioned?A good credit score is of utmost importance for higher chances of loan approval. If you have a bad credit score or you have been a defaulter in any way in your past loans, then it affects the probability of you getting your loan approved. In some banks, you can still get a loan but at a relatively lower deal. Before applying for any type of loan, it is recommended that you get your credit score checked and get suggestions on how to improve it. You can do this online as well.
- Does getting a loan require being a regular salaried professional?Banks assess the applicants based on their income, income source and assets. Every applicant is required to submit enough proofs of income to satisfy the bank that he or she will be able to repay EMIs on the loan amount. The most common proof that the banks ask for is the bank account statement for the past three months. The banks typically charge more interest rates to the applicants who pose risk to the banks.
- What is the age limit for applying for a loan?You must be in the range of 18 to 75 years to be eligible for applying for a loan. Some banks require applicants up to the age of 21 years to provide a guarantor for the loan so that if the applicant fails to pay in any case, the bank will hold the guarantor for the payments. Falling in the age limit is not the only requirement for a loan. If you have a bad credit score, the banks may still refuse to sanction your loan.
- I have been declared bankrupt in the past. Can I still apply for a loan?You can, if you have been released from all the obligations for at least 12 months. However, even in that case, the bank will ask you to state the reasons for that and may even charge you a higher interest rate. This is typically because you will be at a higher risk of not being able to repay on time.
- Can I reapply for a loan if I have been declined once?Whatever your circumstances of getting declined might have been, you can reapply for a loan. However, getting your loan approved totally depends on whether you fulfill all the requirements this time, along with having a satisfactory credit score. Marginal credit score or circumstances may lead to you being charged a higher rate of interest.