While availing a car loan is easy once you have made up your mind on the car that you want to purchase, it is important that you understand all the requirements in detail. You would need to present proper documents exactly as requested by the lender and also be prepared in terms of additional requirements including credit score, down payment, etc. Here is a definite list of everything that you would require for car loan eligibility in India.
Documents Required for Availing Car Loan
Proof of Income
Most of the loan lenders would first verify your earnings and judge the repayment capacity through the same. You would need to present your bank statement and pay slips of 3 to 6 months as requested by the lender. Additionally, you will also need to show the tax returns for the last 2 years. In some cases, lenders might ask for proof of tax history of up to 5 years. Self-employed individuals would additionally require to present audited balance sheet, profit & loss account from the last 2 years, company income tax returns from the last 2 years, and bank statement of last 6 months.
Proof of Residence
For residence proof, you will need to present a utility bill with your residential address in it. Through this the lenders would know where to find you if you stop paying the dues. In case you are planning to drive the car yourself, you will also need a driving licence. Valid documents include telephone bill, electricity bill, Aadhar card, ration card, life insurance policy, passport, voters ID, driving license, etc.
Proof of Identity
For identity proof, you will need to present a valid photo ID with your signature in it. Acceptable IDs include passport, Aadhar card, Voter’s card, driving licence, PAN card, etc. You will need to submit an identity proof that also has your date of birth which will serve as an age proof.
Trade-in Documentation (if applicable)
In case you are trading your old car or vehicle in order to purchase a new one, you must present the relevant documents for the car that you are trading. The title and registration papers of your old vehicle would help the lender identify the correct valuation of that vehicle. This would subsequently impact the total loan that you would require.
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Additional Requirements for Car Loan in India
For availing any kind of loans, it is important to have a good credit history and a low debt-to-income ratio. This would help the lender sanction a car loan to you immediately and without any hesitation. Your credit score would also define the amount of loan as well as the interest rate that would be applied.
Make & Model of the Car
Additionally, you would need to provide the details of the car that you intend to purchase. You must present the estimated value of the car as received from the dealership.
A car in itself is a collateral. However, in case you are planning to secure the loan with additional assets as collaterals, it would help you negotiate better with the interest rate. In this case, you would need to present the complete details for that particular asset which would help the lender determine the valuation of the same.
For a car loan, you would need to pay a lump sum amount in the beginning in order to book the car. Do not get swayed by the zero down payment schemes and offers as that would mean an additional burden on you with high interest rates and inflated monthly instalments. A good amount as down payment would ensure you receive a good interest rate and thereby avail better monthly instalments. This would effectively mean decreased cost of the loan. Various car loan calculators are available online for you to check how much burden in terms of total interest amount would decrease based on the down payment amount.
Apart from the above-mentioned preparations, you must also get mentally prepared for the monthly repayments and ensure that it is within your budget. You must understand how monthly repayment works in case of a car loan. It primarily depends on the loan amount, interest rate, and loan tenure. You can check out various permutations and combinations in these three aspects through the available online car loan EMI calculators. For example, longer loan tenure would ensure lower monthly payment, however, it will increase the total cost of the loan over time. Similarly, a lower interest rate would ensure lesser financial burden. And a lower principal loan amount would also ensure lower monthly payments for you. Based on this research, you can go with the option that best suits you financially.
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Once you know the exact documents and preparations required, availing a car loan becomes an extremely easy process. In order to avail faster loans, you must ensure to be prepared with all relevant documents. For instant digital loans, you wouldn’t even require all these proofs as KYC is done online and instantly. With the web and app portals of PaySense, you can avail fastest digital loans within a matter of a few hours. In three easy steps, you can avail a car loan of up to INR 2 Lakhs in a hassle-free manner.
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