Owning a car is a dream for everyone. Average cost of car in India is between Rs. 5-6 Lac which is a very big figure especially for a low income earner. Moreover getting a loan is also difficult as every bank has minimum income requirement. And on the other hand for a high income earning person/family, getting a loan is very easy. So how can a salaried person with low annual get a car loan, which banks offer loans to such individual’s?
Listed below is the minimum annual income required by the top banks in India:
|Name of Bank||Minimum Annual Income Required|
|Indian Overseas Bank||96,000|
|Kotak Mahindra Bank||1,00,000|
|Union Bank of India||4 times of net income|
|Tamilnad Mercantile Bank||1,20,000|
|Laxmi Vilas Bank||1,20,000|
|Federal Bank||2,40,000 (1,80,000 for loan upto Rs. 2 Lac)|
|Punjab National Bank||2,40,000|
|Jammu and Kashmir Bank||3,00,000|
|United Bank of India||3,60,000|
So as you can see above even a low income can get you car loan provided you meet the other eligibility criteria and provide all the documents as mentioned below. Remember that failure to meet these prerequisites can result in car loan denial.
Other eligibility criteria for car loan
- Many banks also offers loan only to people having salary with the same bank. So check with the bank while applying.
- Age limit: Every bank has minimum age limit that needs to be met and ideally car loans are offered to an individual with age greater than 21 years. These criteria varies for each bank however it remains the same for almost all the banks
- Apart from this, applicant’s CIBIL score is also checked. CIBIL is an organization which maintains databases of all the borrowers of credit card and loans and their payment history. This data is provided by the banks to the CIBIL. This score is between 300 to 900 and ideally for a car loan a score of 750 and upwards is considered good. Checking of this score helps loan providers in evaluating whether a person is credit worthy or not. Doing this benefits banks to reduce their losses. Check out if you are self employed and seeking car loan.
Car loan – documents required
Listed below are the commonly required documents for car loan irrespective of whether you are earning high or low salary.
- ID and address proof
- Completely filled car loan application form
- Income proof (last 3-6 months salary slip) or form 16
- Bank statement showing salary credited
- Few banks might also ask for current company’s appointment letter and experience certificate of previous company. This is required to check whether applicant has good job stability.
- Education qualification degree
Since car loan is a secured loan it can be availed for new and used cars. Also make sure to read all the charges involved while taking the loan especially the interest rate, processing, late payment and prepayment charges. Other way low salaried individual’s can save money is buying second hand car and taking loan for it.