Different Types of Car Loans in India Explained

Are you planning to buy a car but falling short of money? There is no reason why you should not buy a vehicle if you do not have the entire amount.

Banks and non-banking financial companies (NBFCs) provide car loans, which help you in purchasing your dream vehicle. You need to repay the borrowed amount along with the interest during the loan’s tenure. 

You may be aware of a car loan in India. However, do you know that such a loan has different types? Here are the three types of car loans available in the country:

  • New car loan

When you are buying a new car directly from a showroom, you may avail of this loan. The lender will provide the loan once you pay the margin money. In some cases, the financial institution may offer up to 100% of the ex-showroom price of the car.

  • Pre-owned car loan

Banks and NBFCs offer a car loan for a pre-owned vehicle. These loans are available for most types of vehicles, which also include sports utility vehicles (SUVs) and multi-utility vehicles (MUVs). Lenders may offer loans for cars that are up to ten years old with a customized repayment tenure. The objective over here is to ensure that you have no financial difficulties in making timely payments of the EquatedMonthlyInstallments (EMIs).

  • Loan against car

If you already own a car and require urgent funds, you may monetize the vehicle to meet any emergencyrequirements. Based on the car’s assessed value, the lenders may offer between 70% to 85%of the amount as a loan. You have the facility to repay the amount within two years, ensuring that you can pay the EMIs on time without any liquidity crisis. An essential car loan eligibility criterion for a loan against car is that the vehicle should not be older than five years. Moreover, it must still be available in the market. 

Features of different types of car loans

  • Minimal documentation
  • Fast approval and disbursal procedure
  • Affordable car loan interest rates
  • Flexible repayment tenure
  • Higher loan amount

Eligibility criteria

  • Age: Available for Indian residents aged between 21 and 65
  • Income requirement:Varies on the vehicle model, age, and loan duration
  • Type of employment and company: Available for salaried and self-employed individuals, partnership firms, and private and public companies

Lenders like Mahindra Finance offer car loans onlinewith customer-oriented features, like beneficial terms and conditions, competitive interest rates, and quick turnaround of your application. Visit the lender’s website and get a car loan today!