How Car Loans Work
A car loan is typically a secured loan, with the vehicle itself serving as collateral. Lenders usually finance a percentage of the on-road price, and you cover the rest as a down payment. The loan is repaid via EMIs over a tenure that commonly ranges from 1 to 7 years.
Eligibility Factors
- Income and employment stability
- Credit score and repayment history
- Age and loan tenure requested
- Whether the vehicle is new or used (terms often differ)
New vs Used Car Financing
New car loans often come with relatively longer tenures and can finance a higher percentage of the vehicle price. Used car loans may have shorter tenures, a lower loan-to-value ratio, and rates that vary based on the vehicle's age and condition.
What to Check Before You Finance
- Total cost including processing fees and insurance bundling, if any
- Prepayment or foreclosure charges
- Whether the interest rate is fixed or floating
- The realistic EMI relative to your monthly budget
Use the EMI Calculator to estimate your monthly car loan repayment before you visit a dealership.