Banks and NBFCs in India offer 3 types of major loans: new car loan, used car loan and car refinance loan. A new car loan is taken to buy brand new car and a used car loan is taken to buy used/second hand car. Car refinance also known as loan against car is a popular and yet new type of loan offered by banks and NBFCs in India. This is a type of secured mortgage loan. One can get this loan by mortgaging his/her car to the bank/NBFC. The loan amount, tenure and interest rate in car refinance loan depends upon the loan borrower’s profile and the lender’s policy.
Car refinance is the ideal type of loan when you need urgent finances to provide for any emergency. The loan amount approved in car refinance loan depends upon the value of your car. The value of your car is determined by car experts who are appointed by the loan lender. Banks and NBFCs give loan amount up to 60% to 70% of the car value for the tenure of maximum 60 months i.e. 5 years.
Eligibility criteria to get a car refinance loan:
Banks and NBFCs have very specific eligibility criteria to give car refinance loan. The loan borrower should be Indian citizen and should be at least 21 years old. The loan borrower should have a strong credit score of minimum 750. Banks and NBFCs have further divided their eligibility criteria as per the profession of the borrower:
|Professional Applicant/ Self-Employed Applicant
|This category includes regular salaried employees of private limited companies, public sector, government employees etc.
|This category includes professionals like doctor, engineer, architect, chartered accountant, trader, commission agent, contractor etc.
|The applicants should be doing a job for minimum 2 years and should be with the current employer for minimum 1 year.
|The applicants should have been in business or the current profession for at least 2 years.
|The applicant should have a minimum earning of Rs. 2,50,000 p.a. (including spouse’s if co-applicant).
|The applicant should have a minimum earning of Rs. 2,50,000 p.a.
Documents required to avail a car refinance loan:
If you have all the specified documents required to get a car refinance loan, you will be able to get the loan quicker. The list of documents varies as per the profile of the loan borrower. To get a car refinance loan from a bank or NBFC you will require submitting neatly signed and filled home loan application form, passport-size photographs, statements of investments (if any), cost estimation or valuation report from the bank’s/NBFC’s (or finance company’s) panel CA, bank statements and salary slips of last 6 months from application date, Identity and signature proof, address proof, age proof, business proof (registration of business), copy of ITR/assessment orders of 3 years, copy of challans proving that advance Income Tax has been paid, form 16 from the employer etc.
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