Now that you have zeroed in on your dream car after test driving a few of them, you probably cannot wait any longer to buy it. Now the next obvious question is, what are your financial options for buying the dream car? For many of us, a car loans seems like a comfortable financial option to consider, given that it leaves cash liquidity intact and you can get a car loans in easy EMI options at affordable interest rates, so it does not pinch your pocket much. Here’s a guide on what to do next!
First things first. Check if you are eligible for a car loans. Once you know you meet the eligibility criteria, it speeds up the process of getting a loan approved.
Am I eligible for a car loan?
Each bank has its own criteria for car loans. It could be minimum annual income or minimum years of employment among others.
For example, Bank of Baroda provides up to 90% financing for the said category of borrowers-
- Salaried Employees
- Businessmen, professionals and farmers
- Directors of Private and Public Limited companies, Proprietor of Proprietorship Firms, partners of Partnership Firms.
- Corporates (Partnership, private Limited, Public limited and Trust)
What are the documents required for a car loan?
Though documents required may vary from bank to bank, but most commonly, banks ask for the documents mentioned below along with the loan application form-
For Proof of identity, one of these documents van be produced:
- Driving license
- Latest three months old credit card statement.
- Salary slip
- Income tax assessment order
- Utilities like electricity bill, landline bills-not older than 6 months.
- Bank statement
- Letter from employer/public authority (should be validated by bank)
- iVoter ID card
- Retired government employees can produce pension payment orders
- Registered leave and license agreement or sale deed or lease agreement.
Please note, every time there is a change of address or change in any other detail furnished to the bank, the applicant will need to immediately notify it to the bank along with updated document proofs.
Proof of income:
- Bank statement of the last three to six months
- Salary slip and form 16 (for salaried persons)
- Income tax returns (for self-employed persons)
Lenders require you to pay a portion of the price of the car, also called the margin, as the lender pays the rest, which becomes your loan value. In case of Bank of Baroda, the margin is 10% on the ‘on the road’ price of the car.