EMIs or Equated Monthly Installments refer to the monthly payments you make to the lender to repay your loan. These payments include the principal amount as well as the interest i.e. EMI = Principal Amount + Interest on Principal amount. Mathematically, EMI can be calculated using the following formula:

{P x R x (1+R)^N / [(1+R)^N-1]}

where, P = Principal amount of the loan, R = Rate of interest and N = Number of monthly installments.

To process your loan application with the chosen lender, you would be required to submit your KYC documents, which include your identity proof and current address proof, a copy of your PAN Card, your bank statement and your income proofs (Form 16/Salary Slips/ITR). You can get the exact requirement from your loan consultant after applying with us here.

The lenders generally finance 90% of the On-Road Price of the car. Some customers may be eligible for 100% funding too. This means the minimum possible down payment that you have to pay includes the RTO and insurance charges. Down payment is the difference between the On-Road Price of the car and the amount funded by the lender. For example:- Rohit from New Delhi is planning to purchase Honda Amaze, which has an ex-showroom price of ? 7,05,000 in New Delhi. RTO charges for this car in New Delhi will be ? 68,018 and Insurance charges will be ? 29,880. A leading financier approved his new car loan for 90% of the On-Road Price of the car. Therefore, he will have to pay the 10% of On-Road Price (10% of ? 802898 = ? 80289.8) as a down payment to purchase the car.

Most lenders offer car loans for tenures ranging from 1 year to 5 years. You can choose the loan tenure as per your preference. Some lenders like HDFC Bank, Axis Bank, ICICI Bank also offer car loans with tenure up to 7 years.

Generally, new car loan customers choose a 5-year tenure. For a longer tenure, EMIs will be lower but the borrower will end up paying more interest against the loan amount and for a shorter tenure, EMIs will be higher and the customer will end up paying lower interest against the loan amount. So, if the customer is getting a loan for 7 years and doesn’t want to commit to a higher EMI then he should choose a loan tenure for 7 years.

Interest rate primarily depends on the principal amount and tenure of the car loan. Interest rate of lenders generally varies from 8.75% per annum to 11.50% per annum.

Most lenders offer car loans for tenures ranging from 1 to 5 years. You can choose the loan tenure as per your preference. Some lenders like HDFC Bank, Axis Bank, ICICI Bank also offer a car loan with tenure up to 7 years.

When you are paying off a part of the car loan by making larger payments than the EMI, before the end of the tenure, then it is called part prepayment. By part prepayment, your principal outstanding will be reduced and also reduce your future EMIs. Usually, banks accept part prepayment of upto 25% of the principal outstanding amount in a year, charges against the part prepayment depends upon the due month of the EMI.

For example: HDFC charges 5% on the part payment amount in case part prepayment is within 13-24 months from 1st EMI and 3% on the part payment amount in case part prepayment is post 24 months from 1st EMI.

Fixed Interest Rate:

Floating Interest Rate:

After the car loan is approved, a customer will have to sign an agreement including a NACH (National Automated Clearing House) form, a centralised system implemented by National Payments Corporation of India (NPCI), launched with an aim to consolidate multiple ECS (Electronic Clearing Service) systems running across the country allowing paperless debit transactions between banks.

Getting into such an agreement would mean that the customer has granted permission for auto-debiting of the EMI amount from his bank account on a date as mentioned in the agreement till the last EMI of the loan amount.

A number of borrowers assume their job is done after paying off the last equated monthly installment (EMI) on their car loan. But, there are still some unfinished tasks left for the borrower. After completing the repayment of your car loan, there are five important things that you need to do as explained below:

a) If you made the last EMI on your car loan or did a prepayment to close the car loan, then get the final payment receipt from your bank.

b) Within 2-3 weeks’ time of repaying the car loan, you should receive all your documents from the bank via post at your registered address. The set of documents includes a No Dues Certificate (NDC) or No Objection Certificate (NOC) from the bank along with other documents submitted at the time of the car loan application.

c) Do collect the entire repayment statement of your car loan from the bank which you can receive after submitting an application in the bank. This will be useful while updating the credit history in case of any discrepancies in your credit score and report.

d) Hypothecation essentially means that the car for which you have taken a loan for is kept as collateral with the bank until you pay off the loan. The car is in the physical possession of the customer but the bank is the actual owner of the car until the customer pays off the entire loan amount. Once the loan amount is completely repaid, hypothecation removal is required to transfer the ownership of the car to the customer as there is no outstanding amount against the car.

If you want to take a new car loan, you cannot afford to ignore the Credit Information Bureau of India Limited (CIBIL) score. It provides lenders a snapshot of your credit health and history, and your willingness and ability to repay debts on time. CIBIL scores are an indispensable part of getting a new car loan sanctioned. Lenders need to know that you are a creditworthy applicant who they can afford to lend to. Nothing proves to be a more reliable measure (at least at an initial stage) than a good CIBIL score. An unsatisfactory CIBIL score always weakens your chances of getting a car loan without any hassle.

While there is no fixed minimum CIBIL score to apply for a new car loan, it is recommended that you ensure that you have a score of at least 750 before you apply to avoid potential rejection.

Hypothecation removal process can be explained in the following 4 steps:-

Step 1: Receive Documents from the Lender/Bank

No Objection Certificate:

Form 35:

Step 2: Documents to be taken to the RTO

• Original Form 35, and copies of it signed by the registered owner and the bank, original Bank NOC, copy of your PAN Card, copy of valid car insurance, original RC (Registration Certificate), copy of your address proof, copy of valid Pollution Under Control (PUC) Certificate

Step 3: Submit the Hypothecation Removal Application

Step 4: Process to Receive the RC Smart Card

• To collect the Smart Card RC you need to pay a fee.
• Collect receipt of the same, and you can take the Smart Card RC within a few days (date will be specified).
• Visit RTO for collecting the new RC Smart Card (sans hypothecation), on the given date.

CarDekho is a one-stop solution for all your car finance needs. We have partnered with India’s leading banks and NBFCs to help you get a loan to purchase your dream car. We provide you with door-step assistance making the process hassle-free and quick. Just fill out the form, check your eligible quotes from our partners and submit the application to us. We will take care of the rest.

We provide offers starting from 10% per annum. Your exact rate of interest will be determined by the lender on the basis of your loan application. Lenders generally charge you a processing fee that’s directly deducted from your loan amount. The processing fees can be negotiated with the lender at the time of sanction of your application.

Yes, CarDekho offers loans on used cars as well. We are serviceable in 65 locations, have satisfied upward of 45,000 customers through our service and provided hasslefree experience of RC transfer to about 26,000 customers. We are the trusted partners of all leading financiers of India such as HDFC Bank, Axis Bank, IDFC First bank, etc. You can begin your used car loan application here and we will help you process your used car loan with minimal hassle.

Whenever an EMI is missed, the bank charges a late payment fee which varies from bank to bank. Late payment charges of some major lenders can be found below: