India is witnessing a surge in sales in the automotive sector. The sales figures of all the leading two wheeler and four wheeler manufacturers are booking a phenomenal rise; this increase in the demand of automotive can be attributed to the ease of availability of automobile loans by various banks. Banks are offering these loans to its customers at attractive rates to increase the consumer base; banks are funding the purchase of new vehicles and refinancing the old ones too. Car loans is the fastest increasing segment in the auto loans category. Automobile required for commercial purpose are also financed by banks at lower rates. Private sector banks are moving ahead of the their public sector counterparts due to better service.
Types Of Auto Loans Available:
There has been a growing trend of getting purchase of automotives financed. According to a research, as much as 75% of the vehicles purchased in the last decade were financed/ purchased through auto loans. Two wheelers, cars, commercial vehicles are increasingly being purchased on loans. Banks and various non-banking finance companies are cashing on this trend by offering attractive automotive loans. Major automotive manufacturers are tying up with banks for providing auto loans. Easy finance schemes have pushed the auto sales further.
Maximum loan offered by Banks for Auto Loans:
In case of new vehicles, banks generally finance up to a maximum of 90% of the cost of the vehicle.
In case of old/second hand vehicles, banks finance up to a maximum of 85% of the value of the vehicle. Repayment is done by Equated Monthly Installments or EMI.
Interest Charged by Bank on Auto Loans:
Although Public sector banks are offering lower interest rate than their private counterparts but they are lagging behind due to poor quality of service. Interest rates depend on the automotive model, loan tenure. Interest is generally calculated on a monthly reducing balance.
Process Of Auto Loans Application:
Customers can contact the bank representative and apply for an auto loans. They can also fill online forms. There is no processing fee for new cars in most banks/finance companies. However, some companies do charge a minimal processing fee for used automotives.
Documents Required for Auto Loans:
- Application Form
- Photographs
- Proof of income of last two years
- Proof of Residence
- In case of public/Private companies, a certifies copy of MOA and AOA.
List of Some of Banks Offering Auto Loans:
* Terms and conditions may vary from bank to bank.
