What do I need to apply for a Car Loan?
What do I need to apply for a Car Loan?
Buying a car is a significant investment that often lasts a lifetime. If you are considering applying for a Car Loan, it is likely that you want to upgrade your current vehicle or are purchasing a car for the first time. It is important to understand that there are several requirements you must meet in order to obtain a Car Loan. So if you want to learn how to apply for a Car Loan, you're at the right place.
Here's what you need to do.
You need to complete the documentation
Every bank, including ICICI Bank, requires a set of documents for a loan application.
Here's a list of such documents.
PAN Card: You need to provide a copy of your PAN Card.
Valid ID Proof: You need to provide a copy of a valid ID proof that may include an Aadhaar Card, Passport, Driving Licence, Voter ID Card, or Employee ID Card.
Income Proof: You need to provide proof of income, such as pay slips and Form 16. Self-employed individuals would need to provide bank statements and income tax return documents.
ICICI Bank also offers individuals pre-approved loans. If you fall under that category, you may not be required to provide any documents.
The Bank has ensured that Car Loan applicants can do away with in-person documentation with a simple online process for loan applications. Just fill in the details, provide the necessary documents and if everything is in place, your loan application will be approved. One can also visit the bank and complete the loan process.
For a loan, you need to meet the eligibility criteria
Here is the set of eligibility criteria you must meet.
You need to provide some personal information
Residency: Since you're dealing with an Indian bank and have applied for a loan in India, you must be an Indian resident
Age: Car Loans are offered to individuals above the age of 21
Salary/Minimum Income: This depends on various factors, including the loan amount as well as the EMI to your monthly take-home pay ratio
e-KYC/Video KYC: If you are planning to apply for a Car Loan digitally, you'll have to undergo a Video KYC or e-KYC process.
You need to have a good credit history
Credit history is a critical factor in getting a Car Loan approved. It basically assesses the loan applicant's record of borrowing and payment behaviour over time. To offer Car Loans, banks check your credit score to learn of your creditworthiness - a measure of how likely you are to repay the availed Car Loan.
To determine that, a bank may ask you for your credit score. Typically, CIBIL Score is considered for loan applications. It's a three-digit number ranging from 300 to 900 (300 being the lowest and 900 being the highest).
You need to determine the Car Loan amount and calculate the EMI
The Car Loan amount depends on a lot of factors, including the car's price, down payment, and the funds you're eligible for. The best way to determine the Car Loan amount and calculate the EMIs is by using an EMI calculator. An EMI calculator considers the loan amount, interest rate and loan tenure.
You need to choose a suitable Car Loan
Multiple types of Car Loans exist. However, you need to choose one that fits your needs and goals. ICICI Bank offers several types of Car Loans, each with its own set of features and benefits and these include -
Pre-Owned Car Loan: The Pre-Owned Car Loan option is designed for customers looking to purchase a used car. The loan offers competitive interest rates and flexible repayment options with a loan tenure of up to seven years. Moreover, customers can borrow up to <80%> of the car's value.
Refinance Car Loan: The Refinance Car Loan option is designed for customers who already have a Car Loan, which is not hypothecated to any bank/NBFC. And even if it is hypothecated, it should have no outstanding dues.
Top-Up Car Loan: The Top-Up Car Loan option is designed for customers who have an existing Car Loan with ICICI Bank. Applicants can use the loan amount to fund any other expenses, be it a wedding or a vacation. Another USP of this loan is that it gets processed faster and offers attractive interest rates.
Apart from the Car Loan type, you also need to consider the following factors -
Interest rate is the interest charged for borrowing money and is a pivotal factor in choosing a Car Loan.
Loan tenure is the time span in which you have to repay the loan. A longer loan tenure may result in lower EMI payments but it can also result in higher interest charges over time.
Down payment is the initial amount you pay toward the car's purchase price. A higher down payment can reduce your loan amount.
Prepayment and foreclosure charges refer to fees you'll have to pay to close the loan before the completion of the loan tenure.
Processing fee is the fee charged by lenders to process your Car Loan application.
Learn more about ICICI Bank Car Loan by clicking here.
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