Frequently Asked Questions about Vehicle Loans
A vehicle loan is a type of financing provided by banks and financial institutions to
individuals or businesses for purchasing new or used vehicles, including cars, bikes,
and commercial vehicles.
Individuals, salaried employees, self-employed professionals, and businesses can
apply for vehicle loans. The eligibility criteria typically include age, income, credit
score, and employment stability.
Eligibility criteria vary by lender but generally include:
o Age: 18-70 years
o Income: Minimum monthly or annual income as specified by the lender
o Employment: Stable employment or business continuity
o Credit Score: Good credit history and score
o Residency: Proof of residence
o Age: 18-70 years
o Income: Minimum monthly or annual income as specified by the lender
o Employment: Stable employment or business continuity
o Credit Score: Good credit history and score
o Residency: Proof of residence
The loan amount depends on the vehicle's price, your income, creditworthiness, and
the lender's policies. Typically, lenders offer up to 85-100% of the vehicle's on-road
price for new vehicles and a lower percentage for used vehicles.
Interest rates for vehicle loans in India vary based on factors such as the type of
vehicle (new or used), loan tenure, the borrower's credit profile, and the lender's
policies. Generally, interest rates range from 7% to 14% per annum.
Loan tenures for vehicle loans usually range from 1 to 7 years. The choice of tenure
depends on the borrower's repayment capacity and the lender's terms.
Common fees and charges include processing fees, documentation charges,
prepayment penalties, and late payment fees. It's important to review the loan
agreement for a detailed breakdown of these costs.
Required documents typically include:
o Identity Proof: Aadhaar card, PAN card, passport, etc.
o Address Proof: Utility bills, rental agreement, etc.
o Income Proof: Salary slips, bank statements, income tax returns
o Vehicle Details: Proforma invoice or quotation from the dealer
o Employment Proof: Employment certificate or business proof for selfemployed
o Identity Proof: Aadhaar card, PAN card, passport, etc.
o Address Proof: Utility bills, rental agreement, etc.
o Income Proof: Salary slips, bank statements, income tax returns
o Vehicle Details: Proforma invoice or quotation from the dealer
o Employment Proof: Employment certificate or business proof for selfemployed
Yes, most lenders allow prepayment or foreclosure of vehicle loans. However, some
lenders may charge prepayment penalties or foreclosure charges. It's essential to
check the terms and conditions of your loan agreement.
Defaulting on a vehicle loan can have severe consequences, including repossession
of the vehicle by the lender, damage to your credit score, and legal action. It's crucial
to communicate with your lender if you're facing repayment difficulties to explore
options like restructuring the loan.