A Internship Report

On
“Car Loan & Finance Management”
in Partial fulfillment for the award of
Degree of
Bachelor in Business Administration
Submitted to
Sardar Patel University Balaghat(M.P.)
Submitted by
Namo Agrawal
Under the supervision of
Naini Parmar

Contents -
1. Introduction to Car Loans & Finance Management.
2. Car Loan Management tips and tricks.
3. Points to avail a good deal on Car Loan.
4. Features and Benefits of Car Loan.
5. Car Loan Interest rate.
6. Eligiblity criteria to avail a Car Loan from car Finance Company.
7. How to improve Credit Score for Car Loan?
8. Documents Checklists.
9. Loan processing & Sanction procedure.
10. Calculate EMIs for Car Loans.
11. Car Loans FAQs
12. Conclusion

INTRODUCTION
What is Car Loan & Finance Management ?
A car loan (also known as an automobile loan, or auto loan) is a sum of money
a consumer borrows in order to purchase a car. Generally speaking a loan is
an amount of money that is lent to an individual, a business, or another entity.
The party that lends the money is known as the lender, while the party
borrowing the money is called the borrower. When taking out a loan a
borrower agrees to pay back the full loan amount, as well as any interest (a
percentage of the loan amount, usually calculated on an annual basis), by a
certain date, typically by making monthly payments.
Jayam Solutions Vehicle Finance Software helps captive and non-captive
automotive finance companies with rapid decision making ability. Be it
creating and launching products or in origination process loans and
collections are managed more efficiently and effectively. We empower our
partners with the best technology available and help them win more business
and service their customer better, keeping in view full regulatory framework
and keeping tight control over their exposure to risk.
We offer state-of-the-art Vehicle Finance Servicing Software. Our solution
manages every aspect of auto finance servicing life-cycle through delinquency
management, placement and recovery. It offers seamless support for the needs
of the borrower, dealer, internal staff, and management.
Our Vehicle Loan Software is a completely automated solution for your
vehicle finance and for finance management Companies, It offers an all in one
tool to manage all vehicle purchasing loans and maintain Information. You
can store information about customer, guarantor, current status, financial
details, payment schedule and transactions. You can also store photo of the
client, letters, and notes, generate notifications and send SMSes to customers
directly from software. You can set reminders of repayment, interest due date
or for renewal of auto loan.
Our cloud based Vehicle Loan Servicing Software is accessible from anywhere
and everywhere. All you need to have is an internet connection. Our software
is safe and secure assisted with proper data backup and recovery. It suffices
the modern lending landscape by proving a competitive advantage, improving
efficiency in line with increased volume and compliance equipments.
A successful car loan is a great way to build up a solid credit rating and set
yourself up for a long future of mortgages and small business loans. And, of
course, once the car is paid off, it's all yours. You can sell it, trade it or hang
on to it for many happy years of fun, debt-free motoring.
Many consumers apply for car loans at their local bank. When applying for a
car loan a borrower will usually begin by specifying how much money he or
she wants to borrow. The borrower will then provide information about his or
her financial situation, beginning with income (the amount of money he or she
earns by working). Most lenders will require the borrower to provide some
proof of employment, usually in the form of a pay stub (the portion of a
paycheck that includes information about an employee’s earnings, which an
employee keeps for his or her records) or a copy of a tax return (the form
submitted by individuals when paying taxes). The lender will also check the
borrower’s credit report. A credit report is a detailed record of an individual’s
past credit (in short, borrowing) activities, whether in the form of loans or
other debts (money owed). If the prospective borrower has a bad credit
history, he or she may be ineligible for a car loan.
Often a bank or financial institution will preapprove certain customers for car
loans. In these situations a consumer has a certain number of days (often 30,
sometimes 45) to decide whether to seek full approval for a car loan. Because
most borrowers secure a car loan before actually shopping for a car, when an
application for a car loan is approved, a lender will generally give the
borrower a maximum amount he or she will be able to borrow. The borrower
is then free to use this money to purchase the car of his or her choosing;
however, the borrower is not required to spend the full amount offered by the
lender. For example, while a bank might approve a car loan of $50,000 for a
long-term customer, that customer has the right to spend only a fraction of
that amount.
When Did It Begin
The car loan officially originated in 1919, when the General Motors
Corporation (an automobile manufacturer founded in 1908 in Flint,
Michigan) established the General Motors Acceptance Corporation, or
GMAC.GMAC arose in response to the growing demand for automobiles
among American consumers after World War I. In 1919 GMAC established
offices in five North American cities; a year later it opened its first office in
Great Britain. As the car loan business expanded, other automobile
manufacturers began to develop their own financing divisions. One of the
most prominent was the Ford Motor Credit Company, founded in 1923.
Although car loans were available most American consumers during the first
half of the twentieth century paid cash for their automobiles.
More Detailed Information -
When a borrower takes out a loan on a car, he or she is agreeing to buy the
car. Upon entering into the loan agreement the borrower gains the right to
drive the car, while also taking possession of the car’s title (a document
showing proof of ownership of a piece of property). Technically speaking,
however, the borrower does not yet own the car; the lender owns the car until
the borrower has finished paying off the loan.
Each car payment consists of two parts: the principal (the original amount of
the loan) and the interest. Interest on car loans depends primarily on three
main factors: the credit rating of the car buyer, whether the car is new or
used, and the price of the car. As a rule interest rates on new cars tend to be
lower than interest rates on used cars. Also, as the price of a car goes up, the
interest rate will usually go down. For example, if a consumer wants to
purchase a used truck listed for $2,500, the loan interest rate might be 6.49
percent; if that same consumer wants to purchase a new $40,000 Lexus, the
interest rate might only be 5.49 percent.
The bulk of a monthly car payment goes toward the principal, so that the total
amount of the loan decreases steadily with each payment. As a borrower pays
off more of the principal of the loan, he or she moves closer to full ownership
of the car. The amount of money the borrower has paid toward full ownership
is known as equity; in other words with each loan payment the borrower
earns additional equity in the car. At the same time, the value of the car
steadily decreases over the course of the loan, meaning that the car will never
be worth the amount of the original loan. For example, say a borrower takes
out a $10,000 loan to pay for a car. At the time of purchase the car is worth
about $10,000 (minus fees and taxes). Four years later, when the borrower has
paid off the loan, the car may be worth only $2,000. If the borrower has
neglected to take good care of the car, it might be worth substantially less.
This process by which the car loses its value over time is known as
depreciation.
Traditionally car loans were for short periods, generally about 24 months and
no longer than 36 months. In the 1980s, however, standard car loan periods
began to get longer. There were two key reasons for this change. For one, in
the early 1980s more and more consumers began to lease their cars (they paid
a monthly fee in exchange for the right to drive a particular car) rather than
purchase cars outright. Car leases were primarily attractive because they did
not require a down payment, and they tended to require lower monthly
payments than traditional car loans. In order to compete with the car leasing
industry, a number of lenders began to offer car loans for longer terms. As a
result loan periods of 48, 60, and 72 months became standard. In some cases
borrowers were able to receive even longer periods over which to repay their
loans. For example, when a borrower purchases a luxury vehicle (a car, a
truck, or another vehicle that is more expensive than average cars and
generally includes additional features designed to increase car performance or
comfort), he or she will sometimes have as long as 84 months to repay the
loan. In the early twenty-first century a luxury car was generally defined as a
vehicle costing in excess of $30,000. From the early 1990s to the middle of the
following decade, the proportion of Americans who owned luxury cars rose
from 10 to 30 percent. This overall rise in the price of motor vehicles was the
second significant reason that standard car loans became longer in duration.
Car Loan Management tips & tricks

Buying a car of your own requires careful planning and effort. A car loan is
the best financial instrument to fund the purchase of a car. It enables you to
buy a car of your choice which has to be paid for in easy monthly installments.
You can choose the repayment tenure, and the EMI amount, and you are all
set to go. However, it is important to keep in mind that assets such as cars may
depreciate with time. Therefore, maintaining your car loan is as essential as
managing your car. Here are a few relevant tips and tricks to help you cruise
through the car loan repayment:
1. Set Out a Budget -
It is a cherished age-old value to always frame a budget before making a
purchase, and opting for a car loan is no different. Take the first step and
carve out an outline of your daily and necessary expenditure, keeping some
money aside for unforeseen emergencies. Weigh these along with the
upcoming expenses after you buy the car you are taking the loan for. This
means that you need to account for other costs that you will incur in the future
such as fuel, car insurance, and regular maintenance in your budget. This
enables you to plan for the proceeding months more appropriately so that
your finances are not strained when the EMI tenure commences. Also, make
sure your EMI is not more than 15% of your monthly net income. This would
help you maintain your savings while simultaneously paying your EMI.
2. Make a Considerable Down Payment
The golden rule to ease any upcoming pressure is to start early. This comes in
handy also while applying for a car loan. Opting to make a bigger down
payment, even if that comes from your savings has future advantages. It
reduces the need to apply for a higher loan amount, and more significant
down payment reduces the outstanding debt. Additionally, a lesser balance
amount makes it easier to repay the loan. An added advantage of making a
sizeable down payment is that it will encourage you to pay the debt in a
shorter span of time, which will facilitate better car loan management.
3. Choose a shorter tenure
Another smart method to manage your car loan is to come down in favour of a
shorter repayment tenure. Banks that provide loan facilities often charge
lower interest rates for loans with a shorter tenure. This would also mean that
you would be required to pay relatively more EMI, but the stress of a
continuing loan would be off your shoulders in a shorter span of time. Paying
off the debt as soon as possible not only relieves you of the loan but also instils
an increased sense of ownership of the car you just purchased! However, if
choosing a longer repayment term seems more suitable, the benefit includes a
lower EMI amount to be paid over a longer period.
5. Be Punctual with EMIs
The payment of the chosen EMI is to be regularly made. Disciplined payment
of the EMI takes you closer to fully owning your dream car and also facilitates
a healthy credit score. In case you miss an EMI, or delay its payment, the
interest rate accumulates till your next repayment date, and that may become
a budget issue. This not only increases the due amount but may affect your
credibility with the lender. Timely and regular payment of the EMIs
considerably increases your credit score with banks, leading to a faster
processing and disbursal of loans in the future. Your dedication does pay off
well, not just in the present in the form of a car that you own or the duly
repaid loan amount, but for all future loans.
6. Consider Dept Consolidation
We all undergo troubling times where meeting our daily requirements may
seem difficult. Moreover, when we seek financial assistance to cater to a few of
our needs, we might end up paying more than one EMI per month. Keeping
the cumulative EMI amount payable per month under 50% of our monthly
income, too, may seem tough. This may further increase the financial
constraint which the loan was supposed to ease in the first place. In case you
are already squeezing out EMIs for your previous loans, and are planning on
applying for a car loan, you may consider consolidating all your loans into
one. It eases your calculations, keeping loan repayment as simple and hassle-
free as it supposed to be. YES BANK provides you with step-by-step guidance
for all your loan-related queries.
7. Keep in Touch with Your Bank
It is essential for a banking customer, especially a borrower, to be in constant
touch with the lending bank. There might be another financial emergency that
needs your special assistance for a month or two, making you postpone your
EMI payment. It is best to get in touch with your bank and notify them of the
same. It generates mutual trust and enhances your financial credibility. The
probability of missing an EMI and informing the bank about it beforehand
may also be beneficial in terms of advice you may receive from your loan
expert at the bank. A dialogue always results in solutions. At YES BANK, we
understand your financial liabilities and provide assistance at each turn.
Top 5 tips and tricks to finding the right car loan

1. Get finance-ready
Dealer finance may seem like a good idea at the time, especially being a one-
stop-shop for all your car needs! But when you do the sums and comparisons
lenders outside of the car dealership is often the savvier option.
The truth is, it can be tempting when dealer finance offers a low interest rate.
But there's a catch. With dealer finance there is little room for negotiation on
the actual vehicle, so you need to consider your options closely.
Sorting out your car loan before you walk into a dealership will make all the
difference to your negotiating power. They’ll see you as a serious contender if
you’re not depending on dealer finance to convert the enquiry to a sale.
This also applies when looking for a secondhand car, in regards to setting up
your used car loan.
2. Special deals ain’t all that
It’s so appealing when a dealership offers you free service for 5 years or up to
80,000km, isn’t it? Especially if you’ve got a fancyish car that requires
dealership service to keep the warranty viable, it can costs anywhere between
$450 - $900 each service!
Essentially, you could be saving up to $5000 in the first five years of your car's
life, right?
Not exactly. With these kind of ‘special offers’, just as in the dealer finance
scenario, you may not shave all that much off the price of the car, if at all.
Wouldn’t you rather negotiate $5000 off the sale price and take your car to get
serviced at an independent mechanic for $200?
Also, don't fall into the ‘for a limited time only’ trap. Heard that one before?
You want to make a decision about buying an expensive item at the right pace.
Maybe rethink the special offer so you can stay level headed and negotiate the
car you want at the price you can afford. No harm in trying anyway.
3. Fix that rate
Yes, some people prefer the excitement that a variable rate has to offer.
Anticipating low rates for some or all of the term of their loan.
But what if the RBA cash rate falls and your lender doesn’t pass on the
benefits? Kinda feel like you’re being ripped off, right? What if the cash rate
goes up and your lender generously increases their rate? Not. Cool.
That’s kind of why a fixed rate may be a better option for you. Not only will
you (hopefully) secure a reasonable rate, but you will have the same
predictable repayment every month.
It means you can budget for your other monthly expenses around your car
repayment. If you always know what your expenses are, you technically
shouldn’t ever be out of pocket unless your income decreases or your other
expenses increase. Even more reason to avoid the gamble of a variable rate
and opt for a safer, more predictable one.
4. Bonus payments
Well hey there extra money. That cash bonus you received at work, in lotto, as
a gift or from your tax return. You know where you’re going to go? Towards
your debt.
Whether it's on your credit card, mortgage or car loan repayment, try and put
as much as you can towards what you owe the bank. Why? Because you can
pay off your debt quicker, which also means less interest paid in the long run.
Thing is, if you want the freedom and flexibility to repay more when you can,
then you need to sign up to the right lender and product that offers free extra
repayments. This is part of the open conversation you need to have with your
lender before signing your name to that car loan.
5. Car loan flexibility
Ever heard of a lender that offers car loans that give you the flexibility of
using some of it for other things like a small renovation at home or pay for
your next holiday? These loans are likely called personal loans.
If you want to borrow more than the value of your car so that you can have
the freedom to do so much more, than a personal loan is the one you should be
enquiring about.
What’s the catch? You’ll likely pay more in interest with a personal than if
you were to secure a car loan. Although, in some cases you can use the value of
the car as security.
6. Fees
It’s one thing to be charged an application fee, but an ongoing monthly service
fee or early repayment penalty? For what?
One of the best things you can do when shopping for a car loan is opt for a
lender who has a low amount of fees. It's also important to calculate whether
the amount of fees you pay is offset by a low interest rate, or vice versa.
Need a little nudge or help exploring your car loan options? We’re here to
help! Visit Mozo’s car loan comparison table for the best wheel forward.
Mozo provides general product information. We don't consider your personal
objectives, financial situation or needs and we aren't recommending any
specific product to you. You should make your own decision after reading the
PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover
every product in the market. If you decide to apply for a product through our
website, you will be dealing directly with the provider of that product and not
with Mozo.
There is no secret that cars are expensive, particularly for the middle class
families of India. However, car loan helps you deal with that expense in an
efficient manner. Car loan ensures that you do not have to pay a bulk amount
at once. Instead, it helps you manage the loan amount through EMIs; thus,
ensuring that you pay a monthly amount. It allows you to repay the loan at the
same time making sure that you are not overburdened financially. However,
still you have to be careful about the loan as car loan interest rate can make it
difficult to manage the payment. But, there is no need to panic as there are
ways that will help you manage your car loan effectively and efficiently. One
of the key aspects that most people do not consider is the tenure of the loan.
You need to select the perfect tenure for a car loan. The tips mentioned below
should be considered before applying for a loan and during the course of the
loan.
Features and benefits of Car Finance -

1. Makes easy to buy car: – As many banks provide up to 100% finance on ex-
showroom price, you don’t have to wait long to buy your dream car.
2. Flexibility to choose the tenure: – Banks offer car loan for tenure of up to 7
year. You have the flexibility to choose the tenure as per your convenience.
3. Loan for buying used car: – Many banks offer loan on used car these days.
Although the interest rate will be higher than the interest rate on new car loan
and the loan-to-value (LTV) ratio will be lower than the new car loan.
4. Interest rate can be negotiated: – Unlike home loan in case of car loan you
have the flexibility to negotiate the interest rate with your lender if you have a
good credit score and have good relationships with the bank.
5. No collateral required: – You don’t have to put any collateral to avail the
car loan as your vehicle will act as a security with the bank and in case you
fail to make the payment, the bank has the rights to seize the vehicle and sell it
off to recover the funds.
6.Flexibility to choose the payment mode:– You can choose to pay through
post-dated cheques or use the auto debit facility where your equated monthly
installments (EMIs) will be automatically deducted from your bank account.
7.Flexibility to choose the fixed or floating interest rate option: – You can
choose the type of interest rate whether fixed or floating. The interest rate will
depend on the type of interest rate you are choosing.
Other benefits of Car loans
When you avail of a car loan, you will be provided with a list of features and
benefits. All the banks offer a different set of features and benefits that makes
their car loan unique, below listed are some of the common features and
benefits that you will get to enjoy when you opt for car loans.
Lower interest rate: Being a secured loan, car loans are generally subject to
lower rates of interest as compared to other financing options such as personal
loans, home loans, or other secured loans.
Fast loan processing: As car loans are offered against the car you wish to buy;
it thus involves lenient eligibility criteria and minimal documentation. This
enables lenders to process the loan faster.
No need to use your savings: With the availability of car loans, individuals are
not required to shell out their savings or wait for long to buy their dream
vehicle.
Flexibility to choose the tenure: Banks offer car loans for a tenure of up to a
maximum of 7 years. So, you have the flexibility to choose the tenure as per
your convenience.
No additional collateral required: You do not have to put any extra collateral
while availing of a car loan. This is because your vehicle will act as a security
with the bank and in case you fail to make the payment, the bank has the right
to seize the vehicle and sell it off to recover the loan amount.
Flexibility to choose the payment mode: You have the flexibility to choose the
mode of payment to repay your car loan. You can choose to pay through post-
dated cheque or use the auto-debit facility where your equated monthly
installments (EMIs) will be automatically deducted from your bank account.
Make sure you do have sufficient balance in your account from which the
money will be deducted.
Prepayment facility – In a car loan, you can also prepay your loan before the
end of the tenure by using this facility. The terms and conditions may vary
from one bank to another. Some car finance companies allow you to pre-close
the loan only after completing a specific period. While some banks allow you
prepay whenever you want. Charges may be applicable for prepaying your
auto loan and varies for different lenders.
Availability of different repayment options: In a car loan, you get five
different repayment options using which you can repay your loan i.e. regular
EMI, step-up EMI, step-down EMI, special tie-up EMI, and Balloon EMI.
In nutshell, car loans have a lot of great features and advantages. Therefore, it
is one of the most preferred routes for owning your dream four-wheeler
instead of exhausting your long-time savings. However, thorough research is
always recommended before opting for car loan.
Getting your loan approved faster
Check Your Credit Report
Several organisations give you the option to check your credit report without
any charge once a year. Through a credit report, you can check your standing
and eligibility in acquiring a credit card or a loan. In case you have a poor
report, then chances of your loan getting rejected is high, so it’s important to
have a good credit rating to avail a loan – whether it’s home, car, or personal.
Pay your bills on time
One thing you need to ensure that your loan is approved is a good credit score.
You can achieve this by paying your credit card bills on time or your monthly
EMIs on the stipulated date. In case you have a poor credit score, you can
improve it by paying your bills on time for at least six months prior to the loan
application. This will ensure that you get a loan easily.
Don’t borrow too much
By paying a larger amount upfront as down payment, you can reduce the loan
amount, which means that it will easy to pay it off quickly. Remember, a small
loan amount means smaller EMIs or a shorter payment schedule.
Choose a loan plan that fits your budget
Ensure that you choose a loan scheme that enables you to easily pay off the
EMI of the car loan at the earliest. If you’re already paying EMIs for a loan,
ensure that you don’t feel broke at the end of the month by just paying loans.
Read the terms and conditions carefully
Each loan has a specific set of terms and conditions. It is important to read
these conditions carefully, as it will help you choose one loan over the other
Get car insurance
While offering a loan, the main concern of banks and NBFCs is not to incur
any losses. Therefore, having a full-cover insurance is a requirement for many
organisations before sanctioning a car loan as it helps recover the balance debt
in case there is an accident wherein the borrower is at fault.
Points to avail a good deal on Car Loan-
Cars have become a necessity for daily operations. From home to office, from
office to weekend trips vehicles have become an integral part of our life. So do
the car loans available in the market. Many websites claim that they offer best
deals on car loans as compared to others.
Here are 4 tips to focus on before availing a car loan:

1. Negotiate the car price

It is generally overlooked, but the simplest way to trim down the car loan is to
negotiate the car price you are seeking for. Dealers have a sizeable margin on
each fresh unit sold. So do check the car prices across various dealers and
check out the offers available on it. In the end, the price of the car goes down
resulting in a drop in the amount of loan required.
2. Look for the best rate for loan
As you look for the best price for the car, you should also look for the best
deal possible for the bank loan. Often the dealers discourage the buyers to
seek a loan from other banks, but in a majority of cases, the loan deals
provided by dealers are not the best one in the market. So do visit various
banks for the best rate for a car loan before you land up paying hefty interest
on the car.
3. Eye on the credit reports
Keep a check on the credit reports. There may be some discrepancies due to
which the bank is charging a higher rate of interest. Go through the credit
report and if you detect such discrepancies get in touch with the credit rating
authority and sort it out. The credit score also helps to gauge financially where
you stand.
4. Select the shortest loan tenure that fits your pocket
Financing a set of 4 wheels has become easy but you should not go for a
longer tenure for repayment of the car loan. The longer the term it will reduce
the monthly payment but it will also boost the total cost of the car.
Car Loan Interest Rates-
It makes a lot of sense to compare the current car loan offers by different
lenders to find a deal that best meets your financing requirements.
Many people in our country are rethinking about their preferred mode of
conveyance amid the prevailing second wave of the Covid-19 pandemic. Many
who were earlier dependent on public or shared transportation are now
seriously considering buying a car to minimize the possibility of getting
infected by the deadly virus when they step out.
And since cars are big-ticket purchases, many among them are also keen on
taking a car loan to fulfil their aspiration, especially considering the fact that
these financing facilities are usually available at lower interest rates than an
unsecured loan product like a personal loan.
So, if you too are planning to purchase a new car in the near future, do note
that lenders usually finance up to 80%-90% of the car’s on-road price.
However, there are some banks that also offer loan products that finance
100% of the car’s valuation cost subject to terms and conditions. Also, car
loans are usually available in tenures up to 7 years. But despite being a
secured loan product, applicable car loan interest rates are determined by the
lender based on the borrower’s credit score, among other factors, according to
BankBazaar.
There’s also a processing fee that’s usually charged according to the policies of
the lender. That being said, a few banks offer car loans at preferential rates
for their existing home loan borrowers.
Many banks also offer pre-approved car loans to their selected customers,
which could involve concessional interest rates and a quick loan disbursal. As
such, it makes a lot of sense to compare the current car loan offers by different
lenders to find a deal that best meets your financing requirements, as per
BankBazaar.
To help you make informed decisions, we have compiled a list of 10
government and private banks that are currently offering some of the lowest
car loan interest rates in the country.
We have also provided the indicative EMIs for Rs 10-lakh loan for a tenure of
7 years for each of the banks mentioned in the table below. Do note, we have
only considered the lowest advertised interest rate for each lender, and the
interest rate applicable to you could be higher depending on your loan
amount, credit score, type of occupation, or any other terms and conditions of
your chosen lender.
Top 10 Government and Private Banks Currently Offering the Lowest New
Car Loan Interest Rates-

Easy Steps To Get A Car Loan At Best Interest Rates-

When you are considering buying a car by availing of a loan, the interest rate
is a pivotal factor – you just cannot overlook it.
Besides, with interest being levied on the car loan amount––which depends on
the car you wish to buy ––the price of the car, too, holds weightage. Hence
getting the best bargain at the showroom or online which involves deciding the
rate with the sales manager/call centre is equally important.
So, here are 4 easy steps to get a car loan at the best interest rate:
Step #1: Do a comparative analysis
Talking to different banks and/or comparing car loan rates online will save
you a good amount of money on interest outgo over the loan tenure (ranges
upto a maximum of 7 years). This saving, will even reduce your Equated
Monthly Instalment (EMI) on the car loan and bring down the total cost of the
car loan and make sure you strike the best deal!
Axis Bank offers car loans at an attractive interest rate to every category of
customer – be it salaried individuals, businessmen, and corporates.
If you already are a Priority Banking, Burgundy Banking, Wealth Banking
orPrivee Banking customer of Axis Bank, it entitles you to special benefits,
viz. lower processing fee, waiver of income documents, bank statements, faster
loan processing and much more!
You also have a chance to earn Axis eDGE Reward points and these can be
redeemed against some exciting offers.
Step #2: Maintain a healthy credit score
Banks lend at the best rate after they have checked your credit worthiness.
Your credit report is sourced by banks from various credit information
bureaus to understand your credit score, wherefrom they can judge your
credit behaviour and credit worthiness.
If your credit score is high (750 and above), the better it is to get the best deal.
But if your credit score is low, getting the best interest rate, and/or reducing
the loan processing fee could pose a challenge (owing to the high default risk).
Therefore, keep your credit score healthy by always making a point to pay
your utility bills, credit card bill, and loans/EMI on-time. Also, refrain from
opting for too many loans that can impair your credit score.
Step #3: Make hay when the sun shines
Sometimes certain tangible offers are too good to miss, particularly during
festive seasons. Perhaps that’s the time to strike the best deal, because you not
only get the best interest rate on car loan, but could also get benefits such as
discount, loyalty bonus, and valuable car accessories from car showrooms.
Therefore, be on a lookout for who’s offering you the best deal during such
times.
Step #4: Read the fine print
Many a times, there’s more than what we perceive. Hence, reading the fine
print may help you assess hidden cost, loan-to-value ratio, down payment,
prepayment charges, and other charges. And investigative approach can help
you take right decisions.
Eligiblity ceriteria to avail a Car Loan-
The following people are eligible to apply for a New Car Loan:
Salaried Individuals:
This includes employees of private limited companies, employees from public
sector undertakings, including central, state and local bodies
Individuals who are a minimum of 21 years of age at the time of applying for
the loan, and no older than 60 at the end of the loan tenure
Individuals who have had a job for at least 2 years, with a minimum of 1 year
with the current employer
Those who earn a minimum of Rs. 3,00,000 per year, including the income of
the spouse/co-applicant
Individuals who have a telephone/post-paid mobile
Self Employed Individuals and Professionals (Sole Proprietorship):
This includes self-employed sole proprietors at the time of applying for the
loan, and no older than 65 at the end of the loan tenurein the business of
manufacturing, trading or services
Individuals who are a minimum of 21 years of age.
Salaried individuals who are eligible for a car loan
Minimum 21 years of age
Maximum 60 years of age at maturity (conditions apply)
Minimum Net Annual Salary of Rs. 2,40,000 p.a. for all approved car models
Income eligibility based on latest salary slip and Form 16
Minimum of 1 year continuous employment
Self-employed individuals who are eligible for a car loan
Minimum 18 years of age
Maximum 65 years of age at loan maturity
Minimum Net Annual Business income of Rs. 1,80,000 p.a. for selected models
and Rs. 2,00,000 p.a. for others
Income eligibility based on latest Income Tax Returns
Minimum 3 years of employment in the same line of business
Self-employed non-individuals who are eligible for a car loan
Minimum Net Annual Business income or Rs. 1,80,000 p.a. for selected models
and Rs. 2,00,000 p.a. for others
Income eligibility based on latest 2 years Income Tax Returns and audited
financials of 2 years along with computation of income
Minimum 3 years of employment in the same line of business
Priority / Wealth / Privee customers eligible for a car loan
Customers with a vintage of 6 months
A minimum Average Quarterly Balance (AQB) as below:
An AQB of Rs. 1 Lakh for last 2 completed quarters. AQB requirement to be
met for both the quarters
Maximum loan amount restricted to 3 times the AQB in the last 2 quarters
Salary customers eligible for a car loan
Customers who have a Salary A/c with Axis Bank since the past 3 months
Those who work with the following organisations:
Public Limited and Private Limited Companies
MNCs.
Permanent employees of State / Central Government
Salaried Individuals
How to Improve Credit score for Car Loan?

Are poor credit scores holding you back from purchasing your dream car?
Check out expert tips on how you can get an auto loan even with low credit
scores.
Getting an auto loan with poor credit scores is a tricky task. Even if approved,
lenders charge you higher interest rates leading to a bigger EMI and an
increase in the overall loan burden.
But don't lose heart. We're here to help you out. Even if your credit score is
not high, we can help you find a car loan at favourable rates. Repaying your
car loan with timely payments is a great way to improve your credit score.
How to apply for a car loan with a poor credit score?
The steps for applying for a car loan with poor credit scores are just the same
as applying for an auto loan with a good credit score. You choose the car
model, shop around, compare lenders, and approach your preferred lender.
But the big difference is that you will have to pay higher interest when you
take a car loan with a poor credit score. The overall loan will cost you more,
and you have to repay it with bigger EMIs or for a longer tenure.
Generally, borrowers with excellent credit scores – above 750 – are offered
lower interest rates than borrowers with poor credit scores.
Here, we share the top tips with you to help you land a car loan with
favourable terms, even if you have poor credit scores.
Tips to help you get the Right Car Loan even with Poor Credit
Work on improving your credit score before you go car shopping
The credit score is a three-digit numerical score that the lender uses to
evaluate your creditworthiness. The higher the number, the better are the
chances of securing the loan at favourable terms. The credit score is calculated
based on your credit history like – previous loans, repayments on credit card
bills, and other EMIs.
It's highly recommended that you check your latest credit score before
applying for an auto loan (or any other type of loan). Ensure that your credit
report is error-free. If you notice any errors or discrepancies, connect with the
credit bureau to get them rectified.
If you have the time, say six months to one year, you can improve your credit
score before applying for a car loan. Be on your best credit behaviour in the
months before you take a car loan. Don’t take on any new loans or open a new
credit card. Paying outstanding loan EMIs and credit card bills,
closing/consolidating existing loans are a few ways to boost your credit score.

Offer to pay a large down payment

The best way to ensure that your car loan gets approved with a poor credit
score – is to offer to pay a large down payment. Generally, most lenders do not
sanction loans for 100% of the on-road price of the vehicle. The loan amount
covers only 80% of the car’s price. The borrower has to pay the rest out of
his/her pocket.
When you have poor credit scores, offering to pay a larger down payment can
improve your eligibility for securing the loan. When you pay a large down
payment, it reduces the LTV (Loan-to-value) ratio, reducing the lender's risk.
The larger the down payment, the better. The more you save for the down
payment, the more it improves your chances of securing the loan, and better
are the terms of the loan.
Tips to help you get the Right Car Loan even with Poor Credit
Work on improving your credit score before you go car shopping
The credit score is a three-digit numerical score that the lender uses to
evaluate your creditworthiness. The higher the number, the better are the
chances of securing the loan at favourable terms. The credit score is calculated
based on your credit history like – previous loans, repayments on credit card
bills, and other EMIs.
It's highly recommended that you check your latest credit score before
applying for an auto loan (or any other type of loan). Ensure that your credit
report is error-free. If you notice any errors or discrepancies, connect with the
credit bureau to get them rectified.
If you have the time, say six months to one year, you can improve your credit
score before applying for a car loan. Be on your best credit behaviour in the
months before you take a car loan. Don’t take on any new loans or open a new
credit card. Paying outstanding loan EMIs and credit card bills,
closing/consolidating existing loans are a few ways to boost your credit score.
>Offer to pay a large down payment
The best way to ensure that your car loan gets approved with a poor credit
score – is to offer to pay a large down payment. Generally, most lenders do not
sanction loans for 100% of the on-road price of the vehicle. The loan amount
covers only 80% of the car’s price. The borrower has to pay the rest out of
his/her pocket.
When you have poor credit scores, offering to pay a larger down payment can
improve your eligibility for securing the loan. When you pay a large down
payment, it reduces the LTV (Loan-to-value) ratio, reducing the lender's risk.
The larger the down payment, the better. The more you save for the down
payment, the more it improves your chances of securing the loan, and better
are the terms of the loan.
>Bring a co-signer on board
Generally, borrowers don't require a guarantor/co-signer when applying for
an auto loan. However, if your credit scores are poor, consider bringing a co-
signer on board your loan application.
A co-signer is a person who takes the loan along with you. He/she is
responsible for making the loan payments if the primary borrower fails to
repay them. Ideally, the co-signer should be a person who has good credit
scores.
Generally, most borrowers with poor credit scores ask their
parents/relatives/well-wishers/friends to co-sign the loan. The major drawback
with this option is that – it's a considerable risk for the co-signer. If you fail to
repay the loan on time, the co-signer has to take responsibility for it.
If you're sure that you can repay the EMIs on time, you can go for this option.
Having a co-signer improves the chances of loan sanction. It drastically
reduces the cost of the loan by lowering interest rates.
>Go for a budget car and skip the extras
Having a poor credit score means you won't be eligible for higher loan
amounts. This means purchasing the latest sports car/SUV becomes
impossible. Instead, go for budget cars and compromise on extra features like
– premium leather seats, a sunroof, etc. – to reduce the overall loan amount.
When the amount you're looking to borrow is small, the lender is more likely
to approve the loan, even with a poor credit score.
>Final resort – explore dealer financing
Most car dealers have tie-ups with leading lenders – banks and NBFCs – to
make it easy for their customers to avail of car loans. However, the biggest
drawback of this method is that – loans taken directly from dealers are costly.
The interest rates are high. On the positive side, the eligibility criteria are not
stringent, helping you secure the loan quickly.
Documents Checklists for Car Loan-

Getting a car of your dream is no more a hassle when you have all the
documents in order. To get a car loan, you will need to submit a certain set of
documents to ensure the fast processing of your loan. However, the car loan
documents required are similar for most of the car financiers. But it is
advisable to cross-check with your bank before applying for a loan to avoid
any confusion. Read here the list of all the documents that you need to submit
at the time of a car loan application.
1. Any of the following documents as identity & Address Proof
Valid Passport
Permanent Driving license [recent, legible, laminate]
Voters ID Card
Job card issued by NREGA
Letter issued by the National Population Register containing details of name
& address
Aadhar Card(only if Submitted voluntarily & backed by Aadhar consent
Letter.1st 8 digits of Aadhar Number on physical copy to be redacted)Aadhar
Card can be Physical Aadhar or Print out of e- Aadhar (not older than 30 days
from the date of application).
2. All the following documents as income proof:
Audited Balance Sheet
Profit & Loss Account of the previous 2 years
Company ITR for the previous 2 years
3. Any of the following documents as address proof:
Telephone Bill
Electricity Bill
Shop & Establishment Act Certificate
SSI Registered Certificate
Sales Tax Certificate
4. Bank statement of the previous 6 months

Loan processing & Sanction procedure-

If you are planning to buy a house, it is important to have a clear

understanding of the home loan process, which is mainly classified into three
stages – application, loan sanction and disbursal. The home loan sanction
stage is an important one, as this is when the loan is approved or rejected.
After the home loan application process starts, banks verify the applicant’s
documents and decide to approve the loan, if the specified criteria are met.
The lender will then issue a sanction letter. This document is proof that you
are eligible for the loan amount.
What is sanction letter meaning
A sanction letter is a document that is provided by the bank or lending
institution to a borrower, stating that the home loan has been approved. It
contains the terms and conditions based on which the loan will be provided. It
includes vital details such as:
Cae loan amount.
Applicable interest rate (fixed o
fixed or floating).
The base rate for interest calculation.
Loan repayment tenure.
Mode of loan repayment.
EMI/ pre-EMI payment details.
Validity of the loan sanction letter.
Tax benefits.
Special scheme (if applicable).
What is the process of home loan sanction?
The approval of a home loan is a lengthy process. It starts after the borrower
submits the loan application form along with the necessary documents. The
bank or the housing finance company (HFC) then conducts a verification of
the documents and other financial details of the applicant. Banks also assess
the creditworthiness of the borrower through credit bureaus and evaluate the
value of the property used as collateral. If the lender is satisfied, it provides
the sanction letter, confirming that the loan has been approved.
See also: What is the importance of a CIBIL score?
Generally, the home loan approval process can take around three to four
weeks. However, a delay may happen, if there is any lack of information or
insufficient document proofs. The loan may also be put on hold for these
specified reasons.
How is a sanction letter different from in-principle approval and
disbursement letter?
In-principle approval refers to the process whereby the lender assesses the
financial status of the applicant and gives an in-principle approval letter,
guaranteeing that the lender will provide the loan, subject to successful
verification of the documents. Generally, lenders provide in-principle
approval letters for pre-approved home loans. They also charge a fee that is
adjusted in the total loan processing charges. The validity ranges from three
to six months, depending on the lender.
On the other hand, a sanction letter for home loan is a document stating that
you have become eligible to avail of the specified loan amount. The terms and
conditions mentioned in it remain valid till the date specified in the letter. The
lending institution can offer the original terms applied or can change them
depending on the applicant’s loan eligibility.
However, a sanction letter is not the legal approval of the loan and there are
formalities to be completed till the loan is disbursed. Once the loan offer letter
is accepted by the applicant, the lender proceeds to verify all the property
papers that the applicant submits. The lender will keep these documents, as a
security towards the home loan till the time the applicant repays the loan. The
bank then conducts a legal and technical verification of the property that the
applicant is planning to purchase.
Home » Finance » What is Car Loan Sanction Letter and Why is it So
Important?
When you apply for a car loan, the first step involves filling out some
paperwork for the lender. Since the home loan amount is usually substantial,
the process can get tedious and confusing. A home loan sanction letter is a
very important part of this process. In simple words, a sanction letter means a
letter issued by a bank or NBFC to inform a borrower if their loan is
approved. It’s important to keep in mind a sanction letter does not state the
legal approval of a loan. Sounds complicated? Don’t worry. Let’s take a
deeper look at home loan sanction letters and find out the hidden, but
important details to help you through the process after approval.
Car Loan Sanction Letter
Things we covered for you
+ What is a Sanction Letter?
+ What Is the Process of Home Loan Sanction?
+ Importance Of Home Loan Sanction Letter
+ Home Loan Sanction Letter Sample Format
+ Home Loan Sanction Letter Validity
+ Documents Required for the Home Loan Sanction Letter
+ FAQ’s
What is a Sanction Letter?
If you are eligible after applying for a home loan, the lender will send you a
loan sanction letter to confirm your eligibility
As mentioned, before the final loan disbursement, the lender needs to make
sure that certain parameters are met and everything is in order. To inform the
borrower that they are approved for the home loan, the lender issues a
sanction letter to the borrower. Based on certain factors like creditworthiness,
debt history, age, etc, the bank will set up terms of repayment for your car
loan. The sanction letter will contain the terms and conditions the bank has
decided on for the loan along with the basic information about the borrower.
The letter indicates that the home loan application has been successful, and on
successful completion of the paperwork and evaluation formalities and other
conditions, the loan will be approved subsequently.
Terms and conditions of your car loan-
Based on the information provided by the borrower during the application
and verification process, the bank decides an in-principle loan amount to be
disbursed upon approval. This letter is known as the in-principle sanction
letter. A usual in-principle sanction letter format will contain details about the
bank loan sanction letter along with the terms and conditions agreed by the
bank.
A Car Loan Sanction Letter is based on eligibility. A general loan Sanction
letter format will provide the validity for the loan disbursement as well. If the
borrower decides to go further with the loan, they can carry out the process
further in the specified validity on the home loan sanction letter.
What Is the Process of Home Loan Sanction?
The entire Home Loan system can be widely classified into 3 dimensions:
application, sanction, disbursement. While application and disbursement are
quite systematic with paperwork and formalities in place, the process of
receiving bank loan sanction letters is not very organised and depends on
certain varying factors. Some of the factors that may affect your eligibility for
a home loan sanction are:
Profession and Income:
Borrowers with unconventional or irregular employment statuses find it
difficult to get a loan approved. This is because the lender considers the
profession and income of the borrower as an important factor for loan
repayment capability. Irregular or risky employment may have a negative
impact whereas a steady source of income can improve your chances of getting
a home loan sanction letter exponentially.
Dependents:
The number of dependents/co-applicants, for eg. spouse, children, or parents,
will also be considered before your loan is sanctioned by the lender. A higher
number of dependents may lead to less disposable income and hence the
lender may decline your Home Loan application based on repayment
capabilities.
These are some of the factors which may affect your eligibility for a bank’s
loan sanction letter. After you have applied for the home loan, the lender’s
team will verify all the details provided by you. Based on the factors discussed
above, your eligibility will be determined by the lender during this process.
Upon successful verification by the lender’s team, the lender will inform the
buyer if they are eligible for the home loan through the sanction letter. If
rejected, the borrower can improve upon the factors mentioned and apply
after some time again.
Importance Of Car Loan Sanction Letter
Comparing loan sanction letters can help you save big on your home loan
repayment
Now that you know what a typical sanction letter contains, let’s walk through
what makes a home loan sanction letter so important during your search for
the perfect home loan. It is very important to go through the sanction letter in
detail. There is a lot of vital information in the fine prints and if you are not
an expert, you may get confused.
A sanction letter contains important terms related to the repayment of a loan
including details about processing fees, late payment charges, etc. After
approval, you can compare sanction letters from different institutions and
choose the most favourable terms tailored to your requirements. If you have
any problem understanding the content of your sanction letter, reach out to
your lender or any financial expert immediately and get your queries cleared
Profession and Income:
Borrowers with unconventional or irregular employment statuses find it
difficult to get a loan approved. This is because the lender considers the
profession and income of the borrower as an important factor for loan
repayment capability. Irregular or risky employment may have a negative
impact whereas a steady source of income can improve your chances of getting
a home loan sanction letter exponentially.
Age of Property:
If you are taking a loan against a property, the lender will evaluate the value
of the property before the approval. If the property is old, it’s valued less. The
lender will run checks to account for structural collapse and give a rough
valuation after considering other legal and technical factors.
Proof of identity- Aadhaar card, PAN Card, Driving License, Voter ID card,
Passport of the borrower are the accepted documents.
Address Proof- Aadhaar Card, PAN Card, Last three months utility bill for
the property are accepted
Income proof- Salary slip, ITR, or Form 16 (if applicable) is accepted
Property Documents: As per requirement.
The requested documents may differ based on your type of employment. Here
are the documents you need to submit to some of the top lenders if you wish to
proceed with your Home Loan Sanction Letter.
After receiving a sanction letter, it is very important to read in between the
details and understand the terms thoroughly. A slight misunderstanding on
your part and it will prove to be a burden of a lifetime. So, if you have any
queries related to your home loan sanction letter, get in touch with your lender
and get your queries cleared. The best way to ensure smooth functioning is to
have proper communication with your lender. Our team at NoBroker is here
to help you out through the tedious process. From checking eligibility to
getting the best interest rates, NoBroker has you covered. Get in touch today
and our team will respond to your query.
FAQ’s
Q1. What is the meaning of Sanction Letter in Home Loan Application
procedure?
Ans. Sanction Letter is an official document or letter issued by a bank or
NBFC to inform a borrower if their loan is approved. It contains important
details and terms about the loan repayment.
Q2. How long does it take for a lender to process the Home Loan Sanction
Letter?
Ans. After you have applied for the home loan, the lender’s team will verify
all the details provided by you. Depending on the institution, the process can
take up to 3-4 weeks.
Q3. What is the validity of a loan sanction letter in the Home loan Application
procedure?
Ans. Generally, loan sanction letters are valid for a period of six months
during which all the processes- from paperwork completion to property
evaluation should be completed.
Q4. Can a sanctioned loan be cancelled?
Ans. It’s important to keep in mind a sanction letter does not state the legal
approval of a loan. If the authorities find any discrepancies in the information
provided by the borrower, the lender has the right to decline the loan
application.
Q5. What happens after receiving a home loan sanction letter?
Ans. If your home loan application is sanctioned, you should first read the
terms carefully and understand the process thoroughly. After that, if you wish
to avail of the loan, complete the paperwork, and post verification, the loan
will be disbursed in one or more instalments.
Calculate EMIs for Car Loan-

It is very easy to calculate the EMI for your car loan. You will get EMI as soon
as you enter the required loan amount and the interest rate. Installment in
EMI calculator is calculated on reducing balance. As per the rules of financing
institutions, processing fee or possible charges may be
Advantages of Using the Car Loan EMI Calculator
Break-Up of the Due Amount is Provided: The car loan EMI calculator helps
you calculate the processing fees, interest that is paid, the total amount that
must be paid, and the principal amount.
You must be paid, you can plan your budget accordingly. In case the loan
amount that is being availed is large, you may think of opting for a longer
tenure. These details can be determined by using the car loan EMI calculator.
>Accuracy: For the details that are being provided on the calculator, the
results that are displayed are accurate. Manual calculations may not provide
accurate results.
>Saves Time: The main aim of the Car Loan EMI calculator is to save time.
Once the relevant details are entered, the results are displayed almost
immediately.
>Limit: There is no limit to the number of times the calculator can be used.
Therefore, you use the calculator with different variants. This can help you
choose the best lender and the down payment that must be paid.
>Compare: As there is no limit to the number of times that the calculator can
be used, you can compare the EMIs for difference.

This is all in one EMI Loan Calculator with prepayment, chart, amortization
table and lot of additional feature specially for you. This EMI Loan
Amortization Calculator can be used as Home Loan Calculator, Home
Renovation Loan EMI Calculator, Personal EMI Calculator, Amortization
Schedule Calculator, Car EMI Calculator and Two-Wheeler Loan EMI
Calculator. Apart from these simple calculator, it can also be used as Payday
Loan Calculator, Credit Card EMI Calculator, Small Business Loan
Calculator, Agriculture Loan Calculator, Gold Loan EMI Calculator,
Education Loan Calculator, Consumer Durable Loan Calculator and many
more types of calculators.
Car Financre FAQs-

FAQs related to Car loan

What is a car loan?
A car loan is a loan which is backed by a collateral i.e. financial assets you
own such as a home or car that can be used as a payment to the lender if you
make any default in repaying your loan.
Can I apply for a car loan to purchase a used car?
You can easily take a car loan to buy a used car. Since you are buying a
second-hand car, the cost will be relatively cheaper than that of a new car.
What collateral do I need to take a car loan?
A car loan is a secured loan where you keep your car or any asset that you
own as collateral. Therefore, there is no additional collateral requirement
apart from this. However, you need to get the RC (registration certificate) of
the car endorsed with the bank. This endorsement is cancelled after the
repayment of the loan is completed.
What maximum loan amount I can avail through a car loan?
The maximum loan amount approved may vary from one bank to another.
Usually, banks approve loan amounts that range from 80%–90% of the on-
road price of the car. Most of the lending institutions even offer financing of
up to 100% of the car’s ex-showroom price. In addition to these criteria, the
percentage of financing offered also depends on certain other factors such as
the price of the car and type of car i.e. new or used car.
What is the final price I will have to pay for the vehicle?
Despite the low rate of interest, some lenders charge borrowers heavily for
processing, documentation, prepayment, foreclosure, late charges, the default
in payment, etc. This increases the overall loan amount of the car. Therefore,
the borrower is advised to check the final amount that he will have to pay over
the period by using the Car Loan EMI Calculator. Therefore, it is
recommended that you should check various aspects such as principal loan
amount and tenure to get the car loan at the lowest interest rate and save their
money.
conclusion-
As you have researched, loans are expensive. Sometimes we need to consider
the opportunity cost of decisions we make. Although we can afford the montly
payment for a vehicle loan, we need to look at how much interest on the loan
will cost us. Having a better understanding of loans and interest rates will help
you make large purchase decisions in the future.
Used car loans are usually processed with minimal hassles. Once your
approval is through, you can simply drive home your car and enjoy a more
comfortable and convenient commute to work, road trips with friends or go
on drives with the family. With easy loans for used cars, you do not have to
postpone your dreams any longer.