Plan your car purchase with confidence

A car loan is money borrowed to buy a vehicle, repaid in monthly instalments (EMIs) with interest. The car itself serves as collateral for the loan.

Ex-showroom is the base price of the car. On-road adds registration, road tax, insurance, handling charges, and optional accessories. On-road is typically 12–20% higher.

Most lenders require 10–20% of the on-road price. Aim for at least 20% to reduce your EMI, total interest, and the risk of being upside-down on the loan.

Loan-to-Value ratio — the loan amount as a share of the car's price. Car loans typically have an LTV cap of 80–90%, meaning you must pay 10–20% yourself.

Car loans typically range from 1 to 7 years. Most financial advisors recommend 3–5 years. Never finance for longer than you plan to keep the car.

New cars lose about 20% of their value in the first year and roughly 45–50% by year five. Depreciation varies by brand, model, and condition.

Some lenders offer 100% on-road financing, but it's rare and usually comes with a higher interest rate. It also increases your risk of being upside-down on the loan.

First-year insurance is included in the on-road price (if you enable on-road costs). Ongoing insurance, fuel, and maintenance are not part of the loan — budget for them separately.

It's the full cost of buying and financing the car — on-road price plus total interest paid. It does not include fuel, maintenance, or depreciation.

Yes. Many lenders allow prepayment, though some charge a 2–4% penalty. Floating-rate car loans usually have no penalty. Check your agreement first.

It can improve it if you pay on time, or hurt it if you miss payments. A car loan diversifies your credit mix, which can help your score.

Typically: identity proof (PAN, Aadhaar), address proof, income proof (salary slips or ITRs), bank statements, and the car quotation from the dealer.

Usually 1–3 days for pre-approved customers, or up to a week for full verification. Dealer-arranged loans can be approved the same day.

Secured. The car itself is the collateral. If you default, the lender can repossess the vehicle. This is why car loan rates are lower than unsecured personal loans.

Yes, but you'll likely pay a higher interest rate. Some NBFCs and fintech lenders specialise in lower-score borrowers. Improving your score first can save you a lot.

Used car loans usually have higher interest rates (10–18%) and shorter tenures (up to 5 years). The LTV is also lower, often 70–80% of the car's value.

The lender has assessed your profile and is willing to lend a certain amount without a full application. Usually based on your credit history and relationship with the lender.

Some lenders allow refinancing or restructuring, but it's uncommon for car loans. Prepaying is usually the better option if you want to reduce your tenure.

Moving your car loan to a new lender offering a lower rate. Can significantly reduce total interest — but factor in processing fees and foreclosure charges on the old loan.

Most car loans in India are fixed-rate — your EMI stays the same throughout. Some floating-rate options exist but are less common.

Missing a payment triggers a late fee, damages your credit score, and can lead to repossession if repeated. Contact your lender immediately if you're struggling.

A common rule: total EMIs shouldn't exceed 35–40% of your net monthly income, and your car EMI shouldn't exceed 15% of your monthly income. Use our Affordability Calculator for a more accurate picture.

Not directly. What affects your score is repayment behaviour — paying on time, not defaulting. But longer tenure means more total interest, which affects your overall financial health.

Car loans are secured (the car is collateral), so rates are lower and tenures longer. Personal loans are unsecured, so rates are higher and amounts smaller. Car loans are almost always cheaper for vehicle purchases.

Yes, but it's usually more expensive — personal loan rates are 2–6% higher than car loan rates. Only do this if you can't get a car loan or need the flexibility of an unsecured loan.

Someone who shares responsibility for the loan. A co-applicant with good credit and stable income can improve approval chances and may get you a lower rate. Often a spouse or parent.

Yes. Most loans allow early repayment via a lump-sum payment. Some lenders charge a prepayment penalty — check your agreement first.

The lender has assessed your profile and is willing to lend a certain amount without a full application. Usually based on your credit history and relationship with the lender.

Yes, but lenders consider your total debt-to-income ratio. Too many active loans can make it harder to get new credit and may increase the rate on future loans.

A secured loan where you pledge your property as collateral. Interest rates are usually lower than unsecured personal loans.

Also called a moratorium — a temporary period without EMIs. Interest still accrues, so you'll pay more overall. Some lenders offer this for job loss or medical emergencies.

A numerical representation of your creditworthiness (300–900 in India). Higher scores (750+) get better rates, faster approvals, and higher eligibility.

Pay all bills on time, keep credit utilisation under 30%, don't apply for too much credit at once, and maintain a mix of credit types. Check your report for errors regularly.

The lender can repossess the car, sell it to recover the outstanding amount, and take legal action for any shortfall. It also severely damages your credit score.

Shortest tenure your comfortable EMI can support. For cars, keeping it to 3–5 years is ideal — longer tenures increase total interest and the risk of being upside-down.

A shortcut to estimate doubling time: 72 ÷ rate = years. At 9%, money doubles in about 8 years. Useful for understanding compound growth or debt.

Some dealers offer "0% financing" schemes, but the cost is usually hidden in the car price or a processing fee. Read the fine print and compare the on-road price carefully.