Check your eligibility
What These Loans Fund
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Ex-showroom price of the vehicle
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Road tax and registration charges
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Insurance for the first year
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Manufacturer-fitted accessories in...
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Extended warranty
Who Can Consider This Loan?
- Indian resident, generally aged 21 to 65 at loan maturity
- Salaried applicants: stable employment, commonly at least one year of total experience
- Self-employed applicants: business vintage, typically two to three years, with filed returns
- Minimum income threshold that varies by lender, city and vehicle segment
- Credit score materially affects both approval and the rate offered
- Existing EMIs are counted — total obligations usually cannot exceed 50 to 55% of income
What May Not Be Funded?
- Down payment — the margin you contribute, typically 10 to 20 per cent
- Aftermarket accessories not on the vehicle invoice
- Processing fee, documentation and stamping charges
- Ongoing running costs, servicing and annual insurance renewals
- Any shortfall between the loan outstanding and an insurance settlement after a total loss
Always check the sanction letter before you commit.
Why Choose Wealth & Covers?
- Expert advice to choose the right plan
- Plans from leading loans companies
- Hassle-free process and documentation
- End-to-end support, including claim assistance
- Dedicated relationship manager
- Expert Guidance Personalised advice from experienced loans professionals.
- End-to-End Support From choosing the right plan to claim assistance, we are with you always.
- Claims Assistance Hassle-free claim support to ensure you get what you deserve.
- Transparent Process Clear information, easy documentation and a hassle-free experience.
Overview
A new car loan is secured against the vehicle itself, which is why it is priced well below an unsecured personal loan. The lender holds a hypothecation charge on the car until the last instalment clears, after which the charge is removed and the registration certificate becomes clean.
Most buyers negotiate hard on the car and accept the first finance offer put in front of them at the dealership. That is the wrong way round. Over a five-year term, a difference of one percentage point in the rate, or a processing fee waived, is worth more than most of what is won haggling over accessories.
The other decision that matters is how much you borrow. Lenders commonly fund 80 to 90 per cent of the on-road price, and will often stretch further. Borrowing the maximum is rarely the same as borrowing the right amount — a car is a depreciating asset, and a long tenure on a thin down payment leaves you owing more than the car is worth for much of the term.
Who should consider it
This suits a salaried or self-employed buyer purchasing a new vehicle who would rather preserve savings than pay the full price up front, and who has a stable income against which an EMI can be comfortably serviced for the term.
It is worth comparing carefully if you are buying near the end of a model year, when manufacturer-subvented schemes can beat anything a bank offers directly — and worth avoiding entirely if the EMI would push your total obligations past roughly half your take-home income. At that point the honest advice is a cheaper car, not a longer loan.
Benefits
- Secured against the vehicle, so rates sit well below unsecured borrowing
- Up to 80–90% of on-road price funded, and sometimes more for strong profiles
- Tenures from one to seven years, letting you tune the EMI to your cash flow
- No prepayment penalty on floating-rate loans to individuals, under RBI rules
- Manufacturer and dealer subvention schemes can undercut standard bank rates
- Self-employed borrowers may claim the interest as a business expense where the car is used for business
- Approval is fast — often same-day where documentation is in order
What the loan funds, and what it does not
Read the right-hand column first. It is the one that decides how much you have to arrange yourself.
Usually funded
- Ex-showroom price of the vehicle
- Road tax and registration charges, at most lenders
- Insurance for the first year, where the lender permits it to be funded
- Manufacturer-fitted accessories included in the invoice
- Extended warranty, at some lenders, where invoiced with the vehicle
Usually not funded
- Down payment — the margin you contribute, typically 10 to 20 per cent
- Aftermarket accessories not on the vehicle invoice
- Processing fee, documentation and stamping charges
- Ongoing running costs, servicing and annual insurance renewals
- Any shortfall between the loan outstanding and an insurance settlement after a total loss
Funding limits and the treatment of add-ons vary between lenders and move with the borrower profile. The sanction letter you receive is what governs — we will walk you through it before you sign.
How it works with us
- 1 Check eligibility before anyone pulls your credit file We assess income, existing EMIs and profile against lender criteria first, so applications only go where they will actually qualify.
- 2 Compare on total cost, not headline rate Rate, processing fee, tenure and prepayment terms together. A lower rate with a heavy fee is often the costlier loan.
- 3 Documentation prepared once One set of documents, used across lenders, rather than assembling a fresh file for each application.
- 4 Sanction and disbursal The sanction letter states rate, tenure and charges. Funds go directly to the dealer or seller against the invoice.
- 5 Delivery, and the paperwork after it Hypothecation is noted on the RC. We flag the closure formalities so removing it later is not a scramble.
Important considerations
The things a brochure tends to leave out. Read these before you decide.
- A longer tenure lowers the EMI and raises the total interest substantially. Model both before you sign — our EMI calculator shows the full-term cost, not just the monthly figure.
- On a thin down payment and a long tenure you will owe more than the car is worth for a large part of the term. If the car is written off in that period, the insurance settlement may not clear the loan.
- Dealership finance is convenient and is not automatically competitive. Ask for the rate, the processing fee and the total repayment in writing, and compare that against a direct offer.
- Subvented schemes can be genuinely cheap, but often carry conditions — a fixed tenure, a minimum down payment, or a required insurance product. Read what is attached.
- Floating-rate loans to individuals cannot carry prepayment penalties. Fixed-rate loans can. Confirm which you are signing before you plan to prepay.
- Get the hypothecation removed from the registration certificate once the loan closes. It is a small administrative step that people forget and then scramble over when selling the car.
Documents required
- Identity proof — Aadhaar, PAN, passport or driving licence
- Address proof
- Salaried: last three months of salary slips and Form 16
- Self-employed: last two to three years of income tax returns with computation
- Bank statements for the last six months
- Proforma invoice or booking confirmation from the dealer
- Passport-size photographs
- Existing loan statements, where you are servicing other EMIs
Frequently Asked Questions
How much of the car's price will a lender actually fund?
Most lenders fund 80 to 90 per cent of the on-road price, and strong profiles are sometimes offered more. Funding the maximum is not always wise: a car depreciates from the day it is registered, and a small down payment over a long tenure leaves you owing more than the vehicle is worth for a significant part of the term.
Which tenure should I choose?
The shortest one whose EMI you can service comfortably alongside your existing obligations. Extending the term reduces the monthly figure and increases the total interest meaningfully. Run both through the EMI calculator on this page and compare the total repayment, not just the instalment.
Is dealership finance a good deal?
Sometimes — manufacturer-subvented schemes can genuinely undercut a bank. Often it is simply the offer that was nearest to hand. Ask for the rate, the processing fee and the total repayment in writing and compare it against a direct offer before you commit. The comparison takes an hour and is usually worth more than anything negotiated on accessories.
Can I prepay or foreclose the loan early?
Floating-rate loans to individual borrowers cannot carry prepayment or foreclosure charges under RBI rules. Fixed-rate loans can, and many do. Establish which type you are signing before you plan around prepaying.
What credit score do I need?
There is no single threshold, and lenders differ. A stronger score improves both the likelihood of approval and the rate you are offered, and the rate difference across score bands is large enough to be worth attending to. We check your profile against lender criteria before submitting, so applications are not scattered across lenders who were never going to approve.
Do I have to buy insurance through the lender?
Comprehensive cover is mandatory for the loan term, but you are entitled to choose the insurer. Bundled policies are convenient and are not always the best cover or the best price — particularly on the zero-depreciation add-on, which is where most of the value sits on a new car.
What happens to the registration certificate?
The lender's hypothecation is recorded on the RC for the life of the loan. Once you have made the final payment, obtain the no-objection certificate and have the hypothecation removed. It is a small step that becomes an urgent problem only when you try to sell the car.
Can I get a loan if I am self-employed?
Yes. Lenders assess business vintage — commonly two to three years — along with filed returns and bank statements, rather than salary slips. Where the vehicle is genuinely used for business, the interest may be claimable as a business expense; confirm the treatment with your accountant.
Want a shortlist instead of a catalogue?
Tell us the situation and an advisor comes back with two or three options that actually fit — and names what each one gives up.