More often than not, buying a car and availing a car loan goes hand in hand. Many banks and non-banking finance companies offer car loan as one of their products. As the name suggests, a car loan is taken to purchase a car and is quite similar to other types of loan such as personal loan, home loan etc. in aspects like tenure, the rate of interest, EMIs, eligibility criterions and the like. You can avail car loans for both new cars and used cars. The general eligibility criterions for both new car loan and used car loan are more or less similar that includes the age of the borrower, type of the car – new or pre-owned, employment status – salaried or self-employed, the value of the car, and availability of mandatory documents. Among all the criterions here we will focus on the mandatory documents that are needed to avail a used car loan.
The mandatory documents act as proofs of the borrower’s age, place of residence, income source, employment status, repayment capability and credibility too. The list of documents that a car loan applicant must provide to the lender may differ depending on whether the borrower is a salaried individual or a self-employed individual. Below is a list of common documents that needs to be provided regardless of being a salaried or self-employed individual:
a. Identity proof – The applicant must provide proof of identities such as PAN card, driving license, passport, Aadhar card, voter’s card or any government issued proof.
b. Age proof – In order to verify that the applicant is of the eligible age, he has to provide age proof documents such as ration card, passport, driving license, or school leaving certificate.
c. Address proof – The applicant must provide proof of residence by providing any government issued document with the mention of their residential address such as ration card, driving license, passport, telephone or electricity bill.
d. Income proof – Both salaried and self-employed professionals must provide proof of income. Self-employed professionals may submit their profit and loss statement, balance sheet or Income Tax Returns whereas salaried individuals will have to provide salary slips with Form-16 or Income Tax Returns, and bank statement of last three months.
e. Signature proof – The applicant has to provide signature verification proof such as passport, driving license, along with banker’s verification and latest passport size photographs.
Below is a list of mandatory documents that needs to be provided by self-employed individuals who are applying for a used car loan:
a. Registered partnership deed for partnership firms
b. Certificate of incorporation for private and public limited companies
c. Certificate of commencement of business for public limited companies
d. Memorandum and Articles of Association in the case of public and private limited companies
e. Address proof and PAN card of the firm
f. A copy of most recent Income Tax Returns
g. Audited balance sheet and profit and loss account
h. A photograph of Director/Partner
In addition to the above-mentioned documents, the credit score report also forms an integral part while availing any type of loan including a used car loan. So, if you provide your credit score report along with the mandatory documents and if you have a good credit score it can help in the smoother processing of our loan and also in availing better interest rate deals. This is so because your credit report is a window to your credit worthiness and can build trust among lenders to sanction the required loan provided you have maintained a good score.
There may be slight variation in the list of above-mentioned documents depending on the lender’s terms and conditions, but the list remains similar in most cases. So, in order to avail a used car loan, ensure that you have all the necessary documents in place for a hassle-free loan application.