• Zero-Down Payment Car Loan

    A car loan where the borrower does not need to make any down payment is known as a zero down payment car loan. In such loans, the bank or the lending institution offers to fund the entire value of the car and hence, these loans are sometimes also referred to as ‘100% Finance’. A zero down payment car loan is ideal for anyone who wishes to purchase a car but does not have enough funds to make the down payment. Down payment is the initial amount charged by certain banks which is a certain percentage of the car value, to the borrower before the car loan is released. Before we tell you all about zero down payment car loans, let us first understand how down payments affect car loans.

    How Does Down Payment Affect the Total Cost of a Car Loan?

    As stated above, down payment is the initial payment made towards the purchase of any expensive article, which, in this case, is a car. It is typically set as a certain percentage of the car’s value while the balance can be paid by taking a car loan. Down payments are required by the seller usually to validate your financial credibility which will give them some assurance. Paying a substantial amount as a down payment reduces the amount of loan that you need to avail and, in turn, lower the interest rates and the EMI (Equated Monthly Instalment) amount. A large down payment will increase your chances of securing a loan and also allow you to repay it in a shorter time.

    However, what happens if you are unable to or do not wish to make a down payment towards the purchase of a car? This is where zero down payment car loans can come in handy.

    Features of Zero Down Payment Car Loans

    • These car loans do not require you to make any down payment as the bank or the lender will fund the entire cost of the car.
    • Accessories of the car will not be covered by the zero down payment car loans.
    • To avail zero down payment car loans, a good credit track record is a must.
    • Borrowers may have to pay loan processing fees to the lender while availing the zero down payment car loans.
    • To avail a zero down payment car loan, you should make sure that the amount of car loan should not exceed your net yearly income.

    Top Lenders Offering Zero Down Payment Car Loans

    HDFC Bank Car Loan– Private sector lender HDFC Bank offers up to 100% funding with its car loans. Existing customers of HDFC Bank have higher chances of approval for the zero down payment car loans. The process will also require minimal paperwork and the loan will be approved and disbursed quickly. Borrowers may have to pay a small percentage of the loan amount as processing fee which may vary depending on road tax, state registration, and insurance.

    ICICI Bank Car Loan – Zero down payment or 100% finance is available under car loans offered by ICICI Bank. The car loan comes with longer repayment tenures of up to 7 years, affordable interest rates, instant approvals, and quick processing. Foreclosure and pre-payment facilities are available on the ICICI Bank car loan.

    Axis Bank Car Loan – 100% funding on the car’s ‘On-Road’ Price is offered by Axis Bank on its car loans. The loan amount starts from Rs.1 lakh and comes with affordable interest rates starting from 9.25% onwards. The bank also offers the longest repayment tenures of up to 8 years on its car loans. The car loans offered by Axis Bank allows part-prepayment and foreclosure with applicable charges.

    Car Loan Eligibility Criteria for 100% On-Road Finance

    • The applicant must be 25 years or above.
    • He or she must have a CIBIL score of 800 or above with no negative loan repayment history in the credit report.
    • The applicant must have a minimum annual income of Rs.3 lakh. The car loan amount will not be more than the applicant's net annual income. Existing loan EMIs plus the proposed loan EMI must be less than 50% of the applicant's salary.
    • He or she must be a salaried employee or a self-employed person with minimum 3 years of work experience.
    • The applicant's bank balance must be minimum 3 times the proposed loan EMI.
    • No cheque return history in the last 6 months in the applicant's salary account or business current account.
    • The applicant should be residing at the provided address for minimum 2 years.

    To find out if there are reliable zero-down payment auto finance available in India, do some research online. If there are zero-down payment car loan offers, check if you meet the eligibility criteria. Focus on improving your credit score by making regular EMI payments and credit card bill payments on time. Another method of improving your credit score is by balancing secured and unsecured loans.

    Documents Required for availing Zero Down Payment Car Loans

    Here is a list of documents that an applicant must furnish along with a duly-filled and signed car loan application form:

    • For income proof, the applicant can submit the company ID card, salary credit in bank statement, Form 16 (in the case of a salaried employee) and VAT or ST registration with current account statement (for a self-employed individual).
    • For address proof, he or she can submit homeownership deed.
    • For identity proof and age proof, the applicant can submit PAN card, Passport, Aadhaar card, and recent passport-sized photographs.
    • Previous loan or vehicle ownership documents like RC of old car and loan agreement.

    Income proof for a salaried employee can include last 2 years’ Form 16, last 3 months' payslips, and last 6 months' salary account bank statement. Income proof for a self-employed individual can include the last 2 years' ITR, last 6 months' current account statement, Sales Tax certificate, Service Tax certificate, and VAT certificate.

    How to Avail a Zero Down Payment Car Loan ?

    You can avail car loans from different lenders through BankBazaar by following the below-given steps:

    • Visit the official website of BankBazaar.
    • Under the ‘Loans’ tab, click on the ‘Car Loan’ tab.
    • You will be redirected to a page displaying a list of banks/financial entities offering car loans.
    • You can click the ‘Explore’ button to know about the features offered by the car loans of various banks and compare it.
    • Once you have decided the lender, you can click on the ‘Get Approval’ or ‘Apply Now’ button to initiate the car loan application process.
    • After the submission of application, an e-approval form will be sent to you instantly. In the meantime, the bank you have applied for the loan from will also be sent the application.
    • Once the bank receives the application, they will call you to complete the remaining process.

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