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how to get a car loan? step-by-step guide

how to get a car loan? step-by-step guide

July 8, 2022
5 min read
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how to get a car loan? step-by-step guide
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if you want to get financial support to purchase a car, the first step is to collect details about all the available car loans in the market. how you are going to get the funds required to buy the car of your choice should be one of the primary parameters that you should consider first. having adequate knowledge of all the terms and conditions related to a car loan will help you make an informed decision. 

once you have finalized the brand and model of the car that you want to purchase, you need to check your eligibility for the loan. you don't need to wander in the market to get details on your car loans. nowadays, almost all banks and lenders provide loan details and application links online on their websites. in fact, the loan is also processed online and the whole process has become paperless. the basic procedure of loan application and approval is the same for almost all lenders. 

things to consider before getting a car loan

check your credit rating: to make sure your car loan gets approved you need to check your budget, credit rating, and current financial status. all the lenders check the credit score and debt-to-income ratio of borrowers before approving the loan. generally, the higher the credit score, the better chances of getting a loan at a low-interest rate.

compare car loan offers: before getting a car loan, get quotes from multiple lenders to compare the rate of interest, processing fee, documentation charges, and other benefits. it's always better to have information about available alternatives to get a car loan at a lower interest rate.

use a car loan EMI calculator: before applying for a car loan, you can use the CRED car loan calculator to evaluate how much you would be paying. CRED car loan EMI calculator is a free online tool that can help you evaluate the amount you would be paying in monthly installments. you just have to input three key variables - principal amount or loan amount, rate of interest, and the tenure of the loan to get the estimated EMI as well as total interest paid over the loan tenure. 

use CRED car loan calculator

prefer banks over dealers: when you visit the car dealer showroom, the dealer would offer you a car loan option. you should always compare the loan offered by the dealer with other banks to discuss the available options and select the one that is most suitable for you. 

pay a higher down payment: if you pay the higher down payment, you can lower the principal loan component. it will further help you pay a lower interest amount and your monthly installments will also reduce. 

documents required for car loan application

you need to keep handy the following documents while applying for a car loan

  • income proof in the form of salary slips for the last three months
  • bank statement for three months
  • income tax returns filed for the past three years
  • identity proof such as - PAN card, voter’s ID, driving license, passport, or Aadhaar card
  • for address proof, you can submit copies of - electricity/gas bills, voter’s ID, Aadhaar card, ration card, or bill of LIC

here's a step-by-step guide for a car loan application 

once you have decided the lender, principal amount, and the type of loan you would want to borrow, follow the steps provided below to submit your car loan application form:

  • visit the branch office or the official website of the lender 
  • fill the loan application form, attach the photo ID, and other documents required, and submit the form at the lender's office
  • you can also fill the application form online and upload the documents on the official portal of the lender
  • the bank will review your application and you will get your car loan application status update through SMS or email

how long does it take to get a car loan approval?

once you submit your car loan application, the lender will verify your documents at its end and check your credit score. if you are found to be eligible, the lender will approve your car loan request. most of the banks approve car loans within a week's time nowadays. once your loan is approved, the funds are transferred to your account within seconds.