Your Quick Guide Through Car Refinance Loan - Ruloans

Banks and NBFCs in India offer 3 types of major loans: new car loan, used car loan and car refinance loan. A new car loan is taken to buy brand new car and a used car loan is taken to buy used/second hand car. Car refinance also known as loan against car is a popular and yet new type of loan offered by banks and NBFCs in India. This is a type of secured mortgage loan. One can get this loan by mortgaging his/her car to the bank/NBFC. The loan amount, tenure and interest rate in car refinance loan depends upon the loan borrower’s profile and the lender’s policy.

Car refinance is the ideal type of loan when you need urgent finances to provide for any emergency. The loan amount approved in car refinance loan depends upon the value of your car. The value of your car is determined by car experts who are appointed by the loan lender. Banks and NBFCs give loan amount up to 60% to 70% of the car value for the tenure of maximum 60 months i.e. 5 years.

Eligibility criteria to get a car refinance loan:

Banks and NBFCs have very specific car refinance loan eligibility criteria to give car refinance loan. The loan borrower should be Indian citizen and should be at least 21 years old. The loan borrower should have a strong credit score of minimum 750. Banks and NBFCs have further divided their eligibility criteria as per the profession of the borrower:

Salaried Applicant

. This category includes regular salaried employees of private limited companies, public sector, government employees etc.

. The applicants should be doing a job for minimum 2 years and should be with the current employer for minimum 1 year.

. The applicant should have a minimum earning of Rs. 2,50,000 p.a. (including spouse’s if co-applicant).

Professional Applicant/ Self-Employed Applicant

. This category includes professionals like doctor, engineer, architect, chartered accountant, trader, commission agent, contractor etc.

. The applicants should have been in business or the current profession for at least 2 years.

. The applicant should have a minimum earning of Rs. 2,50,000 p.a.