Car Loan at a glance
- What it is
- A car loan is a secured loan to buy a new or used car, with the car hypothecated to the lender until the loan is repaid in EMIs.
- Who it is for
- Salaried and self-employed individuals buying a car for personal use.
- How Early Grow helps
- We compare partner lenders' car loan offers, explain the total cost including fees, and help you complete the application.
- Next step
- Book a free consultation or call +91 93541 57455.
Car loans: what to know before you buy
A car loan finances the purchase of a new or used car for personal use. The car is hypothecated to the lender, and this is recorded on the registration certificate until the loan is closed. You pay a down payment, and the lender funds the rest over a fixed tenure in EMIs.
Early Grow compares car loan offers from partner banks and NBFCs and explains the total cost, including fees. It also helps you complete the application. Buying a two-wheeler or electric scooter instead? See auto loans for two-wheelers and other vehicles.
New or used car
- New car loan – usually based on the ex-showroom or on-road price, depending on the lender. Lenders often have tie-ups with dealers.
- Used car loan – based on the lender’s valuation of the car, with limits on the car’s age at the end of the loan. Rates are usually higher than for new cars.
Typical eligibility
- Salaried or self-employed individuals within the lender’s age limits.
- Income that can support the EMI along with your existing obligations.
- A satisfactory credit history. A higher score generally improves the terms.
A co-applicant can strengthen the application.
Documents usually required
- KYC: PAN, and Aadhaar or passport.
- Income proof: salary slips and bank statements, or ITRs for self-employed applicants.
- The pro forma invoice from the dealer (new car) or the RC and inspection details (used car).
How Early Grow helps
- We look at the car you want, your budget and a comfortable EMI. The EMI calculator on this page gives a quick estimate.
- We compare partner lender offers on rate, fees, tenure and prepayment terms.
- We help you submit the application. The lender verifies your details and decides.
- The lender pays the dealer or seller, and hypothecation is recorded on the RC.
Costs and terms to check
- The processing fee and documentation charges.
- Prepayment and foreclosure charges, especially on fixed-rate loans.
- Whether insurance or accessories are bundled into the loan.
- Remember to have the hypothecation removed from the RC after you close the loan.
Official references
Frequently asked questions
It depends on the car’s price, the lender’s loan-to-value policy, your income and existing EMIs. New cars usually qualify for a higher percentage than used cars.
The lender considers your credit score, income, employer or business profile, the loan tenure, whether the car is new or used, and its own pricing policy.
Yes, many lenders finance used cars based on their valuation, with limits on the car’s age. Rates are typically higher than for new cars.
Usually yes. Foreclosure or part-prepayment charges depend on the lender, whether the rate is fixed or floating, and your agreement.
Yes. Adding an earning co-applicant, such as a spouse or parent, can improve your eligibility.
The lender charges late-payment fees, and the missed payment is reported to credit bureaus, which lowers your score. Continued default can lead to repossession of the car under the loan agreement.
Talk to an Early Grow adviser
Tell us what you need and we will explain your options, the documents required and the next steps. The first consultation is free.