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  • Loan against Car

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  • Banks and lenders in India offer loans against cars at interest rates starting at around 13.75%. About 50% to 150% of the value of the car can be availed as a loan for loan tenures ranging from 12 months to 84 months. The processing fee applicable ranges from 1% to 3%.

    Loan against car is a convenient refinancing option that allows you to pledge your car so that you can get a loan to meet your immediate financial requirements such as wedding expenses, educational expenses, health expenses, or emergency expenditures.

    Compare Best Loan against Car Plans in 2019

    Listed below, along with details, are a few of the banks in India that offer loans against cars:

    Lender’s Name Interest Rate Loan Amount Tenure
    HDFC Bank 13.75% to 16% p.a. Up to 150% of the original value of the car 12 months to 84 months
    Bajaj Finserv As per lender’s discretion Up to 95% of the value of the car 12 months to 60 months
    Axis Bank 14.90% to 17% p.a. Up to 50% of the value of the car 12 months to 60 months

    HDFC Bank

    HDFC offers a top-up loan against the car you own up to 150% of its value. The bank does not require valuation of the car to get the loan. If you are a netbanking user, and are eligible to use the QuickMoney facility, you can get the loan amount in less than 12 hours.

    Key Highlights of HDFC’s Loan against Car

    • Interest rates are up to 2% lower than interest rates for personal loans
    • Instant approval for existing car loan customers if they have paid EMIs for the last 9 months in time
    • Instant disbursal of the loan amount through QuickMoney
    Lender’s Name Processing Fee EMI (for Rs.5 lakh) Part Payment Charges Pre-Closure Charges
    HDFC Bank 1.5% of the loan amount Rs.11,569 (at 13.75% p.a. interest for a 5-year tenure) 3% to 5% of the part-payment amount Nil – 6% of principal outstanding

    *Note: Charges mentioned above may vary based on applicable taxes.

    Internal Charges

    • Overdue EMI interest: 2% per month
    • Documentation charges: Rs.630
    • Collateral charges: Rs.475
    • Stamp duty charges: At actuals

    Bajaj Finserv

    Bajaj Finserv allows you to pledge your car so that you can get a loan up to Rs.20 lakh. Salaried as well as self-employed individuals can apply for the loan as long as they meet the minimum income criteria of Rs.23,000 and Rs.2 lakh respectively. Applicants are also required to have a good track record for the past 9 months.

    Key Highlights of Bajaj Finserv’s Loan against Car

    • Instant approval of the loan for existing Bajaj Finserv customers
    • Disbursement of the loan amount in 24 hours after approval
    • Loan-related information can be tracked through the customer portal, Experia
    Lender’s Name Processing Fee EMI (for Rs.5 lakh) Part Payment Charges Pre-Closure Charges
    Bajaj Finserv 2.25% to 3% Rs.11,634 (at 14% p.a. interest for a 5-year tenure) 12 months to 60 months 4% of the outstanding principal

    *Note: Charges mentioned above may vary based on applicable taxes.

    Internal Charges:

    • Overdue EMI interest: 2% per month
    • EMI bounce charges: Rs.1,000 per bounce
    • Online convenience fee: Rs.2,499

    Axis Bank

    Axis Bank offers loans against cars for up to Rs.10 lakh to eligible customers. Privileged customers of the bank get pre-approved loans with minimal documentation and fast processing.

    Key Highlights of Axis Bank’s Loan against Car

    • Up to 50% of the value of the car can be availed as a loan.
    • Quick processing and minimal documentation for Privileged customers
    • Pre-approved loans at attractive interest rates for Privileged customers
    Lender’s Name Processing Fee EMI (for Rs.5 lakh) Part Payment Charges Pre-Closure Charges
    Axis Bank 1% of the loan amount Rs.11,632 (at 13.99% p.a. interest for a 5-year tenure) 5% of the Part Payment amount 5% of the Principal Outstanding

    *Note: Charges mentioned above may vary based on applicable taxes.

    Internal Charges:

    • Documentation charges: Rs.500
    • Overdue EMI interest: 2% per month
    • Cheque bounce or instrument return charges: Rs.500 per instance
    • Stamp duty charges: Actuals

    Many other banks and lenders such as ICICI Bank, Mahindra Finance, Kotak Mahindra also offer loan against car options.

    Eligibility to avail a Loan against car

    • The loan applicant should be at least 21 years and a maximum of 60 to 65 years at the time of applying for the loan.
    • Salaried persons as well as self-employed individuals can apply for the loan.
    • The loan applicant is required to have a decent income to apply for the loan.
    • Typically, loans are provided only against cars that are below 10 years old.

    Documents Required to avail a Loan against car

    While applying for a loan against your car, you will have to submit documents to the lender, some of which are mentioned below:

    • Proof of age
    • Voter’s ID card
    • Photo ration card
    • Passport
    • PAN card
    • Employer’s certificate
    • Proof of identity
    • Voter’s ID card
    • Passport Copy
    • Photo ration card with your date of birth
    • Driving license
    • PAN card
    • Proof of income
    • Most recent Form 16 or ITR
    • Most recent salary slips
    • Salary account statements
    • Proof of address
    • Telephone bill
    • Passport
    • Employer’s certificate
    • Credit card statement
    • Photo driving license
    • Photo ration card
    • Legal Documents for Your Car
    • Valid motor insurance policy documents
    • Registration certificate (RC book)

    Things to consider while getting a Loan Against your Car

    Here are a few things you should know before you apply for a loan against your car:

    • Most lenders require applicants to have had a good loan repayment track record for a minimum of 9 months. Your loan will be approved only if you had paid the EMIs of your previous loan, if any, within the due date.
    • The income requirement requested by the bank/NBFC needs to be proved with salary slips of IT Return documents. Make sure you have the documents in hand when you apply for the loan.
    • The loan amount you can receive against your car will depend on the bank. While some lenders offer only 50% of the original value of the car, other lenders offer 150% of the value.
    • Your existing bank, where you have a salary account or a loan, may offer pre-approved loans which come with faster processing and minimal documentation.

    How to Apply for a Loan Against your Car

    Once you’ve done sufficient research and zeroed down on the lender you want to get the loan from, you can either visit the nearest branch of the lender or apply through their website. If you wish to make comparisons between offers made by lenders, you can visit an online aggregator like BankBazaar.

    Once you have decided on the lender, you can apply for the loan on the lender’s website. They will respond to your application and intimate you with the loan application process. You can carry out the application and document submission process either online or offline depending on the services offered by the lender.

    Loan Against Car FAQs

    1. How do I know how much I have to pay as the EMI each month?

    Ans: You can use an online EMI calculator and find out exactly how much you have to pay each month by entering a few basic values such as the loan amount, loan tenure, and interest rate.

    2. Will there be a valuation process before the loan is approved against the car?

    Ans: Yes, certain banks are particular about the valuation and verification process that needs to be conducted before the loan can be offered against the car. Some banks, such as HDFC Bank, on the other hand, do not require valuation.

    3. Will I have to provide security for the loan?

    Ans: Since the loan is availed against the car, the car itself acts as the security for the loan. In most cases, lenders do not request for any additional security.

    4. What types of cars can be financed?

    Ans: Banks decide whether loans can be offered against specific cars or not. Loans are mostly offered against hatchbacks and sedans. However, they are usually not offered against cars that are out of production.

    5. How long does it take for loan disbursal?

    Ans: Once the loan application is approved, the loan disbursal is done quickly. You will receive the amount in your account within a few hours or a few days, depending on the bank.

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