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.
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 |
| Axis Bank | 14.90% to 17% p.a. | Up to 50% of the value of the car | 12 months to 60 months |
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
| 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
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
| Lender’s Name | Processing Fee | EMI (for Rs.5 lakh) | Part Payment Charges | Pre-Closure Charges | |
|---|---|---|---|---|---|
| Axis Bank | 2% 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:
Many other banks and lenders such as Mahindra Finance, Kotak Mahindra also offer loan against car options.
While applying for a loan against your car, you will have to submit documents to the lender, some of which are mentioned below:
Here are a few things you should know before you 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.
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.
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.
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.
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.
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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