Eligibility Criteria and Documents Required

The car loan eligibility criteria can be different for different banks. The common criteria are as follows:

• Age of the individual must be between 18 years and 75 years
• Minimum net monthly income of Rs. 20,000
• At least 1 year of employment with the current employer
• Must be salaried or self-employed, working for a government establishment or a private company

To prove your eligibility, you’ll need to provide certain documents. Though this too is specific to different lenders, the common documents will be:

Identity proof (any of the following)	AadhaarPassportDriving licenseVoters ID cardPAN card
Address proof (any of the following)	AadhaarPassportDriving licenseRation cardUtility bills
Proof of income	Form 16Salary slips if you are salariedLatest Income Tax ReturnsBank statements going back 6 months

Note: Make sure you check exactly what documents the lender wants. The documents required can change depending on your situation too. The documents required to take a used car loan are the same as above.

Car Loan – Checklist to Follow While Applying for it

Steps	Requirement	Inference
Apply for a car loan	Compare all offers available	To find the loan that offers you the highest loan amount and the most affordable interest rate
Submit Income Proof	Bank Statement (last 6 months) Pay-Slips (last 3 months) IT- Returns (last 2 years)	Lender wants to establish your ability to repay the loan
Submit Proof of Address and Identity	PAN Card, Voter’s ID, Aadhaar Card, Passport, etc.	Lender wants to establish your nationality, identity, and permanent address
Credit History	PAN Card	Lender wants to check your past credit records and establish if you can be trusted to make regular repayments
Information About Vehicle	Sales Receipts from the showroom from where the vehicle was purchased	Lender must confirm that the deal was affected as intended
Proof of Insurance and Driving License	Copies of the vehicle’s Motor Insurance and your Driving License	Lender must establish that all laws and protocols are followed with regards to the purchased vehicle.

                                       Personal Loans vs. Car Loans

When it comes to a big purchase – for example a car, we often resort to loans for the financing of the same. Both personal loans and car loans are two of the biggest and most common financing options that are availed by consumers.

A Personal Loan can be used for any purpose. There are no bindings in the case of personal loans. However, car loans are particularly available for car purchases. To have a better understanding, you can check the pros and cons of both the products.

Pros and Cons of Personal Loans

Pros:

• There are no restrictions in regard to the usage of the funds. The loan amount can be used for any purpose.
• It offers the flexibility in the payment structure.

Cons:

• The interest rate for a personal loan is likely to be higher as it is an unsecured loan product.
• Owing to its unsecured nature, personal loans also come with more stringent lending criteria.
• Credit score plays a major role in ascertaining your eligibility for the loan.

Pros and Cons of Car Loans

Pros:

• Car loans usually have a lower rate of interest.
• It is easier to avail a car loan.
• Since it is a secured loan, an individual with a mediocre credit score is also likely to be eligible for the loan.
• The vehicle itself acts as a security against the loan.

Cons:

• You will be required to provide a down-payment.
• The car will be hypothecated to the bank and you will receive the complete ownership only after all payments have been made.

However, it is advised that you compare different loan products and then choose the one that suits your requirements.