Car Loan for Self Employed: Income, Eligibility, Documents
Being self employed is a wonderful thing, as you are your own boss. However everything in life comes with challenges and entrepreneurship too has its own challenges. Self employed individual has to generate funds on his own for running the company be it small or big, give salary to the employees, other operating expenses and so on. Moreover to generate this money they have to rely on loans. But getting any type of loan is also a challenge because the most important factor taken into consideration by financial institution is the annual income. If the company is big then getting any type of loan (car/personal etc.) or credit is easy however not every company is big. Small business can get various types of loan such as personal, car etc.
So what about car loan for self employed with low income? Do banks offer loans to such individuals? Answer is YES. Car financing for self employed is given by most of the banks and listed in the below table is the minimum annual requirement by the banks:
|Name of Bank||Minimum Annual Income Required|
|Indian Overseas Bank||96,000|
|Kotak Mahindra Bank||1,00,000|
|Tamilnad Mercantile Bank||1,20,000|
|Laxmi Vilas Bank||1,20,000|
|Axis Bank||1,80,000 for selected models and 2,00,000 for others|
|HDFC Bank||60,000 for standard car and 1,80,000 for premium/mid-sized car|
|Federal Bank||90,000 (after meeting all the EMI)|
|Punjab National Bank||2,40,000|
|UCO Bank||5,00,000 (metro centres), 4,00,000 (other centres)|
|Jammu and Kashmir Bank||4,00,000|
|United Bank of India||3,60,000|
Documents required for self employed:
Apart from the car loan application form, self employed individual has to provide following documents while applying for a car loan. Not all the documents are required by every bank but still it’s good to keep it handy in case banks require them at later stage for further verification. And moreover these documents would be required by the businesses for any credit applications.
- ID and residential address proof
- Office ownership and address proof: In order to verify the authenticity of the applicant whether he’s the real owner of the said business or not, office ownership proof is required by the banks. Documents include property, maintenance and electricity bills.
- Business existence proof: Again this is an important document to evaluate the sustainability of the business. Documents include 3 years old SARAL copy, shop establishment act, tax registration and company registration license. Banks normally require that applicant should have been running the business for minimum 2 years.
- Income proof: Although every document is crucial but this one is most important. And self employed individual will have to produce income tax returns of minimum 2 years.
- Other finance related documents: This includes profit and loss account, balance sheet, audit report from the chartered accountant, bank statement of both savings as well as current account showing all the transactions.
CIBIL score and car loan:
The most important factor which every bank looks is the car loan applicant’s CIBIL score in order to the judge the repayment capacity of the individual. Based on this single factor, any loan or credit card application can get denied.
For a car loan, financial institution consider a CIBIL score of 750 and above ideal i.e. chances of loan denial are reduced atleast due to the CIBIL score. Check out details on banks which offer car loan to low salary individual’s.
About CIBIL score:
Credit Information Bureau of India Limited is an organization which maintains database of all the borrowers i.e. loan or credit card customers of financial institutions. These instituitions provide details of their customers to CIBIL which contains mainly the borrowing details such as loan amount, repayment history along with other details. Financial institutions then verify these details whenever any loan or credit card application is made. The reason for scrutinization is to evaluate the repayment capacity of the applicant in order to cut-off the defaulters which are loss making for the banks.
Looking for car loan for used car? Read this.