What is a Vehicle Loan?
A vehicle loan is a type of secured loan specifically designed to help individuals purchase a two-wheeler, car, or commercial vehicle. The vehicle itself serves as collateral for the loan, which typically results in lower interest rates compared to unsecured loans. Vehicle loans allow you to spread the cost of your vehicle over a period of time through fixed monthly installments (EMIs).
Key Features of Vehicle Loans
Secured Financing
The vehicle serves as collateral, leading to lower interest rates
Flexible Tenure
Loan tenure typically ranges from 1 to 7 years depending on vehicle type
High Funding
Up to 90-100% of the vehicle's ex-showroom price can be financed
Quick Processing
Faster approval and disbursal compared to other loan types
Calculate Your Vehicle Loan EMI
Loan Details
Loan Summary
Loan Amount
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Monthly EMI
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Total Interest
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Total Payment
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Loan Amortization Breakdown
See how your principal and interest payments change over time.
Principal Amount
Total Interest
View Full Amortization Schedule (Monthly)
| Month | Beginning Balance | EMI | Principal Paid | Interest Paid | Ending Balance |
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Tips for Choosing a Vehicle Loan
1
Compare Interest Rates
Check rates from multiple banks and NBFCs to find the most competitive offer
2
Consider Total Cost
Look beyond EMI to understand total interest payable over the loan tenure
3
Check Processing Fees
Compare processing fees and other hidden charges across lenders
4
Prepayment Options
Check prepayment penalties and foreclosure charges before finalizing
5
Loan-to-Value Ratio
Understand how much the lender will finance versus your down payment
6
Insurance Requirements
Check if the lender mandates specific insurance policies or providers
Documents Required for Vehicle Loan
Identity Proof
- Aadhaar Card
- PAN Card
- Passport
- Voter ID
- Driving License
Address Proof
- Aadhaar Card
- Passport
- Utility Bills (Electricity/Water/Gas)
- Rent Agreement (if applicable)
- Property Documents (if owned)
Income Proof
- Salary slips (last 3 months)
- Bank statements (last 6 months)
- Form 16 or IT Returns (last 2 years)
- Employment certificate
Vehicle Documents
- Quotation from dealer
- Registration certificate (after purchase)
- Insurance papers
- Road tax receipt
Eligibility Criteria for Vehicle Loans
Age Requirement
Minimum: 21 years
Maximum: 60-65 years (at loan maturity)
Employment Status
Salaried or self-employed with stable income source for at least 2-3 years
Income Criteria
Minimum monthly income typically ₹15,000-₹25,000 depending on lender and location
Credit Score
Generally 650+ score required, though some lenders may accept lower with higher interest
Benefits of a Vehicle Loan
Immediate Vehicle Ownership
Get your desired vehicle without waiting to save the full amount
Flexible Repayment
Choose tenure that suits your financial capability (typically 1-7 years)
Lower Interest Rates
Secured nature of loan results in lower rates than personal loans
Tax Benefits
For business purposes, interest and depreciation may be tax-deductible
Maintenance Support
Some lenders offer additional services like maintenance packages
Top-up Loans
Option to get additional financing on existing vehicle loan
Types of Vehicle Loans
New Car Loan
Financing for brand new passenger vehicles with loan tenure typically up to 7 years
- Up to 90% of ex-showroom price
- Lower interest rates
- Insurance often bundled
Used Car Loan
Financing for pre-owned vehicles with shorter tenure and different eligibility criteria
- Up to 70-80% of market value
- Higher interest rates
- Vehicle age restrictions apply
Two-Wheeler Loan
Financing for motorcycles, scooters with simpler documentation and quicker processing
- Up to 90-100% financing
- Shorter tenure (1-5 years)
- Minimal documentation
Commercial Vehicle Loan
Financing for vehicles used for business purposes like trucks, tempos, vans
- Customized repayment based on cash flow
- Higher loan amounts
- Business viability assessment
Frequently Asked Questions
How is the interest rate on a vehicle loan determined?
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The interest rate is primarily determined by your credit score, income, and the loan amount. A higher credit score and stable income can help you secure a lower interest rate. Some lenders also consider the vehicle's model and age when setting the rate.
What is the maximum loan tenure for a vehicle loan?
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The maximum loan tenure for a new car loan is typically up to 7 years (84 months). For two-wheelers and used cars, the tenure is generally shorter, ranging from 1 to 5 years.
Can I get a loan for a used car?
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Yes, most banks and financial institutions offer loans for used cars. The loan amount usually covers 70% to 80% of the vehicle's market value, and the interest rates are often higher than those for new cars.
What is a down payment for a vehicle loan?
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A down payment is the initial amount you pay upfront for the vehicle. The loan amount is then calculated based on the remaining cost. A higher down payment can reduce your loan amount and, consequently, your monthly EMI.
Are there any tax benefits on a vehicle loan?
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If you're using the vehicle for commercial purposes, you may be eligible to claim tax deductions on the interest paid and the vehicle's depreciation. However, for personal use, there are generally no tax benefits available on vehicle loans.
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