Possessing a car is no longer a status symbol, but has become a necessity. With air pollution increasing in most urban areas, driving on congested roads has become a major health hazard. To protect yourself and your dear ones from catching infections due to the air pollution, it would be better to buy a car and avoid the noxious fumes coming out from other vehicles and the dust they raise. However, you may not be able to buy a car outright, and may have to take a car loan. On top of it, if you don’t have income proof, it becomes even more difficult to purchase a car, though it is not impossible. Of course, in such a case you will have to pay more car loan interest rate, and your car loan eligibility criteria may be tougher. When buying a car without income proof, you need to keep the following things in mind:
Be Prepared to Shell Out A Big Down Payment
Banks and financial institutions can be very finicky about documentation, especially income proof, before they sanction you a car loan. However, under certain circumstances they do provide car loans without income proof. It is just that you will have to fork out more down payment than would be necessary if you did provide an income proof. Since a loan without income proof would essentially be an unsecured loan, the lender would require you to pay a substantial down payment. This is because, in case you default on EMI payments, the lender can take possession of the car and resell it without having to bear a major loss.
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Be Careful About the Documentation of The Car Loan
After you have made a large down payment, you need to be very careful that you get all the documentation done properly, especially if the dealer is arranging the car loan. It sometimes happens that the dealer may not provide you with the proper documentation, deliberately or otherwise, which may have serious consequences for you. And if you have already made the down payment, you may suffer a big loss. An expert would advise you to take a car loan from a third party without income proof, instead of from a dealer.
Car Loan Eligibility
Car loan eligibility can be different depending on the different car loan providers. You have to be careful of this as loan rejections can negatively impact your credit-worthiness scores. The first and foremost thing they check is whether you are between the ages 21 to 65. You also need to have a minimum work experience of two years with an annual salary of around 4 lakhs. Car loan interest rates start from 9%. For example, the Allahabad Bank charges 9.1% as car loan interest rate, while in Axis Bank the car loan interest rate can go up to 11%.
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