What Is Car Loan Eligibility Criteria

by Arjit Chalmela Finance Student

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You don’t need to save up to buy your dream car. Buying your dream car is now within your reach because you can simply opt for a car loan and your dream car will be yours. A car loan is one of the most popular loans and is offered by several lenders today.

A car loan is a secured loan that provides funds to the borrower to buy a car. However, it doesn’t entirely finance the off road price of the car. Typically car loans finance between 65% to 80% of the value of the car depending on the borrower’s eligibility and the make and model of the car.

It is very important to look at the car loan eligibility before you opt for this loan. Even though this loan is widely available among lenders, making a loan application is serious and can impact your credit score. This is why it is important to make sure your loan application is tailored to the lender’s eligibility criteria.

Car loan eligibility criteria:

Lenders give out a car loan to both salaried and self employed borrowers. The eligibility criteria for both are slightly different.

Eligibility for salaried employees

This includes salaried employees working in private companies, public sector companies, Central, State and Local Government bodies.
Most lenders have a minimum applicant age of 21 years. Some lenders also specify a maximum age
Minimum number of years of employment with the employer
Minimum income of the employment either annual income or monthly income

Eligibility for self employed borrowers

This includes businessmen, self employed professionals, traders, service providers etc.
Most lenders specify a minimum age of 21 years for applying for a car loan. Some lenders have a maximum age limit as well
Minimum number of years of business (generally 3 years)
Minimum profits of the business or annul income

Lenders also extend these loans to One Person Companies, partnership firms, limited liability partnerships, private companies etc. They have the same income and minimum years of operation requirements.

One way to check for car loan eligibility criteria is to visit the lender’s website. Most lenders have their eligibility criteria displayed on the website for the users to see. Another way is to use a car loan EMI calculator. A car loan eligibility calculator requires you to input details about your car, income, age and other details and calculates the loan amount you will be eligible for based on the criteria of the lender. Using this free tool can help a great deal in planning your loan application.