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    Car Loan Schemes for Government Employees 2018

    In an effort to serve the citizens of the country, some of the leading banks in India have rolled out special car loan schemes for central and state government employees in the form of lower interest rates, 0% foreclosure, prepayment and processing charges, and up to 100% auto financing. Car loans make up a significant portion of the retail lending business of banks. What's more, leading auto manufacturers like Hyundai and Tata Motors have known to offer special discounts for government employees in the past.

    Following the 7th Pay Commission pay scale revision which affects the income of about 50 lakh central government employees and 58 lakh pensioners, some leading banks and auto manufacturers have rolled out special car loan schemes for government employees and pensioners. There is likely to be a 23.55% increase in allowances, salaries, and pensions of the government employees which will increase the standard of living and lifestyles of these employees. For the purchase of new and used cars of their choice, they can opt for any of the below-listed car loan schemes.

    Here is a list of banks that offer special car loan schemes for government employees in 2018:

    HDFC Bank Car Loan Schemes

    HDFC Bank offers 100% on-road funding to government employees for the purchase of new cars at a 0% foreclosure charge, Rs.999 processing fee, and a loan tenure of up to 84 months. For 0% a foreclosure charge, the employee must furnish his or her government ID card along with the car loan documents to the bank. A 0% foreclosure charge is applicable only after 24 EMI payments on his or her car loan. This special offer from HDFC Bank is valid only on select car models from manufacturers like Maruti, Toyota, Honda, and Hyundai.

    State Bank of India (SBI) Car Loan Schemes

    SBI offers a maximum car loan amount of 48 times the net monthly income of a state or central government employee. The minimum annual income requirement of a government employee aged 21 to 65 years must be Rs.2.5 lakh in order to be eligible for a car loan from SBI. Government employees must submit the following documents along with a duly-filled and signed car loan application form to the bank:

    • Last 6 months' bank account statements and last 2 years' IT returns or Form 16 for income proof.
    • 2 passport-size photographs for identity proof.
    • PAN Card, Passport, Voters ID Card and Driving License for identity proof and age proof.
    • Ration card and utility bills like telephone or electricity bills for address proof.

    With an SBI car loan, he or she can purchase new passenger cars, Sports Utility Vehicles (SUVs), and Multi-Utility Vehicles (MUVs). At SBI, a government employee can get a car loan of up to 85% of the on-road price at an interest rate of 8.7% to 9.2% p.a. for a maximum loan tenure of 7 years at 0% prepayment and foreclosure charges. For a car loan amount of up to Rs.6 lakh, a processing fee of Rs.1,000 plus GST is waived off.

    Punjab National Bank (PNB) Car Loan Schemes

    PNB offers car loan to government employees at attractive terms for the purchase of a new or used car. PNB Pride Car Loan is available for permanent central and state government employees, defence personnel, and paramilitary forces. PNB Pride Car Loan for Government Employees can be used to purchase a new car, SUV, MUV, jeep or van. It can also be used to purchase a used/pre-owned car, jeep, SUV, van or MUV that is not more than 3 years old.

    At PNB, he or she can avail a car loan amount of up to 25 times of the net monthly income. The minimum net monthly income requirement of a government employee is Rs.20,000. The floating interest rate for PNB Pride Car Loan is MCLR + 0.60% p.a. while the fixed interest rate is MCLR + 0.95% p.a. There is no prepayment fee charged for car loans with a floating interest rate whereas for car loans with a fixed interest rate, there is 2% fee charged on the prepayment amount. The maximum loan tenure for a new car loan is 84 months and for a used car loan, it is 60 months. The processing fee for PNB Pride Car Loan is waived off.

    How to apply for a car loan?

    One can apply for a car loan via the online or offline method. Before applying for a car loan, take the time to compare various car loan offers on a reliable third-party comparison website so as to get a good deal. Choose one with a low interest rate, zero processing fee, a suitable loan tenure, and flexible repayment options. In the case of the online method, download the car loan application form from the bank website, fill it up, and submit it along with the necessary identity, age, income, and address proofs to the bank. The bank will verify the details furnished by the applicant and process the loan application.

    Upon car loan approval, the loan amount will be disbursed to the applicant’s bank account in a matter of few hours. In the case of the offline method, visit the nearest bank branch. Applying for a car loan online is easier. It can be done from the comfort of one’s home or office with just a few clicks of the mouse. Furthermore, before applying for a car loan online, one can check his or her car loan eligibility on the bank website so as to avoid rejection. Multiple loan rejections can have a negative effect on one’s credit score. A good credit score of 750 or above is required to get low-interest rate unsecured and secured loans.

    Car Loan EMI

    The bank website will have an online car loan EMI calculator which can be used for free to choose an affordable loan amount, a suitable loan tenure and also to find out how much a car loan will cost the borrower on a monthly basis. The tool can be used any number of times for free of cost. It is easy and simple to use. Input the car loan amount, loan tenure, interest rate, and processing fee into the tool and click on the ‘calculate’ button. Instant and accurate results of the EMI calculations will be displayed in the form of an amortisation table. The table represents the periodic car loan repayment schedule.

    Depending on the results, the car loan amount or loan tenure can be adjusted. It is advisable to maintain a low debt-to-income ratio wherein one’s EMI payments don’t exceed more than 50% of his or her income. A high debt-to-income ratio can result in skipped or delayed EMI payments. As the car serves as collateral, if the borrower defaults on his or her car loan, the bank has the right to repossess the car and put it up for auction to make up for the outstanding dues. Banks allow borrowers to prepay a part or whole of the loan amount after 6 to 12 EMI payments. Car loan EMI calculations can help decide whether it is wise to make part or full prepayment.

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