Updated 22 May 2025 at 15:30 IST

Buying a Car? Here’s Your Step-by-Step Guide to Getting the Best Car Loan Without the Stress

The hassle of taking a car loan intimidates even the best of us - from the amount of documentation, legal jargon to the trouble of comparing offers and rates. To help you navigate through the process smoothly, here's a comprehensive step-by-step guide to applying for a car loan.

Republic Business
3 min read

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Car Loan Application | Image: Sora AI

The hassle of taking a car loan intimidates even the best of us. With the amount of documentation, legal jargon, and the trouble of comparing offers and rates, the process is one anyone would like to avoid. To help you navigate through the process smoothly, here's a comprehensive step-by-step guide to applying for a car loan.

Check for Eligibility

Before you check which bank offers the best for your situation, it's important to ensure that you are eligible to take up a car loan to begin with. All bank websites have an eligibility section for a car loan. If they do not, call them and enquire. Ask about age, minimum income, employment conditions, and credit scores. If you are eligible to take a loan, even with a few banks, you may move on to the next step.

Finalise the Car

You may have some idea about this, but before taking the loan, you must know which model you plan on purchasing, so you may make your financial and loan decisions accordingly.

Compare Loan Offers

Always compare loan offers among all the banks you are eligible to borrow from. This will help you get a bang for your buck by maximizing your benefits and minimizing your payments. Look out for interest rates, loan tenures, processing fees, and down payments you must make on the bank's website. Compare all of these offers and make your decision accordingly.
To reduce your research time, here is a list of interest rates and loan tenures you can go through.

Name of the Bank	Interest Rate (p.a.)	Tenure
State Bank of India	9.10% p.a. onwards	Up to 7 years
Indian Overseas Bank	8.60% p.a. onwards	Up to 7 years
IDFC First Bank	9.99% p.a. onwards	Up to 10 years
Jammu and Kashmir Bank	RLLR + 0.75% p.a. onwards (floating) RLLR + 0.25% p.a. onwards (fixed)	Up to 7 years
Canara Bank	8.45% p.a. onwards	Up to 7 years
HDFC Bank	9.40% p.a. onwards (Rack Interest)	Up to 7 years
IndusInd Bank	8.00% p.a. onwards	Up to 5 years
ICICI Bank	9.10% p.a. onwards	Up to 7 years
Karur Vysya Bank	9.35% p.a. onwards	Up to 7 years
South Indian Bank	8.75% p.a. onwards	Up to 7 years
Kotak Mahindra Bank	Contact the bank	Up to 7 years
IDBI Bank	8.80% p.a. onwards (floating) 9.20% p.a. onwards (fixed)	Up to 7 years
Yes Bank	Contact the bank	Up to 8 years
Karnataka Bank	8.88% p.a. onwards	Up to 7 years
Federal Bank of India	9.00% p.a. onwards	Up to 7 years
Equitas Small Finance Bank	9.00% p.a. onwards	Up to 7 years
Punjab National Bank	Floating: 8.50% p.a. onward Fixed: 9.50% p.a. onwards	Up to 7 years
Union Bank of India	8.40% p.a. onwards	Up to 7 years
Axis Bank	9.40% p.a. onwards	Up to 7 years
Bank of Baroda	Fixed: 8.80% p.a. onwards Floating: 9.15% p.a. onwards	Up to 7 years
Tamilnad Mercantile Bank	10.50% p.a. onwards	Up to 7 years
Bank of India	8.75% p.a. onwards	Up to 7 years
Bank of Maharashtra	8.45% p.a. onwards	Up to 7 years
Central Bank of India	8.60% p.a. onwards	Up to 7 years
Indian Bank	8.50% p.a. onwards	Up to 7 years
UCO Bank	8.35% p.a. onwards	Up to 7 years
Bandhan Bank	9.47% p.a. onwards	Up to 7 years

Necessary Documents

You must submit the necessary documents to the bank before you borrow.
Identity Proof: PAN Card or Aadhar Card
Address Proof: Utility Bills or Rental Agreement
Income Proof: Salary Slips, Bank Statements, or ITRs
Car Quotation from dealers

This will vary depending on what your bank requires.

Application

Apply for the loan once you have chosen your bank and acquired the necessary documents; you may either apply online or offline, at the discretion of the bank.

Loan Processing and Approval

Once the application is completed, the bank will verify your documents and creditworthiness. Once approved, you will receive a sanction letter. Make sure to go through the details of the loan amount, interest rate, and tenure.

Your loan amount is directly disbursed to your car dealer. At this stage, you may be required to pay the down payment.

Repayment

According to your Equated Monthly Instalment (EMI) schedule, pay your loan back.

That’s how easy it is to apply for a car loan, free from legal jargon and complexity. Make sure to track, record, and execute every procedure with utmost detail.

Published 22 May 2025 at 15:30 IST

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