Car Loan Eligibility Criteria in India: What Lenders Look For

Buying a car is easier today thanks to flexible auto loans. But getting approved depends on whether you meet the lender’s eligibility criteria. This article breaks down the key factors lenders consider and how you can improve your chances.

Why Car Loan Eligibility Matters

Each lender has its own checklist. Meeting these criteria increases your chance of getting the loan at a lower interest rate. Failing them might lead to higher EMIs or rejection.

Key Factors That Determine Car Loan Eligibility

1. Age and Citizenship

Most lenders in India offer car loans to individuals aged between 21 and 65 years. You must be an Indian citizen or permanent resident.

2. Employment Type

Your income stability plays a huge role. Lenders prefer:

• Salaried Employees: Minimum 1 year in current job
• Self-Employed Individuals: At least 2 years in business

3. Minimum Income Requirement

This varies by city and lender. On average:

• Metro Cities: ₹20,000–₹25,000 per month
• Tier 2/3 Cities: ₹15,000–₹20,000 per month

4. Credit Score

A credit score of 750 or above is considered ideal. Lower scores may still qualify, but with higher interest rates or a lower loan amount.

What is a credit score? It’s a 3-digit number that reflects your repayment history, outstanding loans, and credit behaviour—ranging from 300 to 900.

5. Loan-to-Income Ratio (LTI)

This is the ratio of your monthly loan EMI to your net monthly income. Ideally, your total EMIs (including the new car loan) should not exceed 40–50% of your monthly income.

6. Down Payment Capacity

Most banks fund up to 85%–90% of the car’s on-road price. You must pay the rest upfront. A higher down payment can improve approval chances and lower EMI burden.

Documents Required for Car Loan Approval

Here’s a list of documents lenders typically ask for:

• Identity Proof: Aadhaar, PAN Card, Passport, or Voter ID
• Address Proof: Utility bill, Rent agreement, or Aadhaar
• Income Proof: Salary slips (last 3 months), Form 16, or ITR
• Bank Statements: Last 6 months showing salary/income
• Employment Proof: Offer letter, employee ID, business registration (for self-employed)
• Car Quotation: Proforma invoice from dealer

How to Improve Your Car Loan Eligibility

Not meeting all criteria? Here are ways to increase your chances:

• Improve your credit score: Clear pending EMIs and credit card dues
• Show additional income: Rental income, freelance earnings, etc.
• Apply with a co-applicant: Spouse or parent with a strong profile
• Make a higher down payment: Reduces lender risk
• Choose a longer tenure: Lowers EMI, improves affordability metrics

Typical Car Loan Terms in India

Here’s what you can expect from most banks and NBFCs:

Note: These ranges vary by bank and borrower profile. Check with your bank before applying.

Best Banks and NBFCs for Car Loans (2025)

Some popular lenders in India include:

• HDFC Bank: Fast processing, special rates for existing customers
• SBI: Low processing fee, wide dealer network
• ICICI Bank: Attractive rates for salaried professionals
• Bajaj Finserv: Instant approval for eligible borrowers
• Axis Bank: 100% on-road funding for select profiles

Always compare offers on an aggregator like BankBazaar or directly visit your bank’s website.

FAQs on Car Loan Eligibility

✅ What is the minimum salary for a car loan?

₹15,000–₹25,000 per month, depending on city and bank.

✅ Can I get a car loan with a low CIBIL score?

Yes, but you may need a guarantor or accept a higher interest rate.

✅ How much car loan can I get on ₹30,000 salary?

Up to ₹3–5 lakhs, based on tenure, credit score, and other liabilities.

✅ Are zero down payment loans available?

Yes, for select customers and car models. Approval is tougher.

✅ Does car loan eligibility differ for new vs used cars?

Yes. Used car loans usually have stricter criteria and lower LTV (loan-to-value ratio).

Key Takeaways