Auto Loan
Auto Loan
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What is an Auto Loan?
An Auto Loan, also known as a Car Loan, is a type of secured loan offered by banks and NBFCs to help individuals purchase new or used vehicles. The vehicle itself acts as collateral, allowing lenders to offer lower interest rates compared to unsecured loans.
Auto loans can be availed for new cars, used cars, or electric vehicles, with flexible tenures and repayment options.
Types of Auto Loans
- New Car Loan: Financing for purchasing brand-new vehicles with lower interest rates.
- Used Car Loan: Loan for pre-owned vehicles, usually at slightly higher interest rates.
- Electric Vehicle Loan: Special loans with attractive rates to promote eco-friendly vehicles.
- Loan Against Car: Borrow money by pledging your existing car as collateral.
Benefits of Taking an Auto Loan
- Affordable EMIs with flexible repayment tenure.
- Lower interest rates due to secured nature.
- Quick approval and fast disbursal.
- Option to finance up to 90% of the vehicle’s on-road price.
- Special offers for salaried, self-employed, and EV buyers.
Auto Loan Interest Rates in India
Auto loan interest rates vary based on lender, applicant’s credit score, vehicle type, and tenure. Below is a comparative table of major Indian banks and their car loan interest rates.
| Bank / Lender | Interest Rate (p.a.) | Loan Tenure | Processing Fee |
|---|---|---|---|
| SBI | 8.85% – 9.80% | Up to 7 years | Up to 1% |
| HDFC Bank | 9.50% – 10.75% | Up to 7 years | Up to 1% |
| ICICI Bank | 9.25% – 10.50% | Up to 7 years | Up to 1% |
| Axis Bank | 9.30% – 11.00% | Up to 7 years | ₹3,500 – ₹5,000 |
| Kotak Mahindra Bank | 9.50% – 11.50% | Up to 7 years | Up to 2% |
| Punjab National Bank | 8.95% – 9.90% | Up to 7 years | Up to 1% |
| Bank of Baroda | 8.90% – 9.85% | Up to 7 years | Nil – 1% |
Eligibility Criteria for Auto Loan
- Applicant must be an Indian resident aged between 21 and 65 years.
- Salaried or self-employed individuals are eligible.
- Minimum monthly income as per lender norms.
- Stable employment or business continuity.
- Good credit score (preferably 700+).
Documents Required for Auto Loan
- Loan application form with photographs.
- Identity proof – Aadhaar, PAN, Passport, or Driving Licence.
- Address proof – Utility bill, Aadhaar, or Rent Agreement.
- Income proof – Salary slips, Form 16, or ITR.
- Bank statements for the last 6 months.
- Quotation or invoice of the vehicle.
Factors Affecting Auto Loan Interest Rate
- Credit Score: Higher scores attract lower interest rates.
- Loan Tenure: Longer tenure may increase interest cost.
- Vehicle Type: New cars get better rates than used cars.
- Down Payment: Higher down payment reduces interest burden.
- Lender Policies: Rates vary across banks and NBFCs.
How to Apply for an Auto Loan?
- Compare car loan interest rates across banks.
- Check eligibility and EMI affordability.
- Submit the online or offline application.
- Upload documents and complete verification.
- Get loan approval and disbursal.
Online platforms make auto loan applications quick, transparent, and hassle-free.
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