02/04/2025

Car Loan

Car Loan Interest Rates ?

There are several lenders/Bank/NBFC who offer car loans in India. The interest rates for the car loans in India start at as low as 6.65% p.a. to 8.50%  p.a. Based on your credit rating, you can avail a car loan which finances up to 100% of the on-road price of the car.

Types of Car Loan Interest Rates - Fixed and Floating

Car loan interest rates can be fixed or floating in nature.

A fixed interest rate refers to a rate which remains constant throughout the loan tenure. Factors like market fluctuations do not affect fixed interest rates. On the other hand, a Floating Interest rate is a type of rate that keeps getting modified as per changing trends in the financial market.

Eligibility Criteria

  1. Age of the individual must be between 18 years and 75 years
  2. Minimum net monthly income of Rs. 20,000
  3. Must be salaried or self-employed, working for a government establishment or a private company
  4. At least 1 year of employment with the current employer

Documents Required

  1. Identity proof (any one – PAN Card, Aadhar,  Passport, Driving License,  Voters ID) 
  2. Address proof ( Any One –  Aadhar,  Passport, Driving License,  Electricity Bill, Postpaid Phone Bill, Ration Card).
  3. Proof of income ( Any One – Form No.16,  Salary slip if your are a salaried person, Latest Income Tax filed Return,  Bank statements last 6 months.  

How to Calculate Car Loan EMI (Equated Monthly Installments ) ?

Few key factors :-

  1. The size of the Car Loan amount.
  2. The interest rate that is applicable to the Car Loan.
  3. The tenure of the Car Loan.
  4. The processing fees of the Car Loan

Income Tax Benefits on Car Loans Taken to Purchase Electric Vehicles

If you have taken a car loan to purchase an Electric Vehicle (EV), you can now enjoy a tax rebate of Rs.1.5 lakh on the interest paid. This was announced in the latest Union Budget (2019-20) by Finance Minister Nirmala Sitharaman and is a part of the government’s efforts to stimulate the adoption of environment-friendly mobility solutions. If you have purchased an electric vehicle, you will be able to avail a benefit of about Rs.2.5 lakh during the entire term of the loan. The government has also slashed the tax rates on electric vehicles to 5% from the earlier 12%.

How to claim tax benefits on Car Loans?

Tax Benefits :-

  1. Interest on Car Loan Claim 100% Business Expenses 
  2. Depreciation on Car allowed as a business expenses.
  3. Claim Fuel, Driver Salary and Car Repairs and Maintenance Expenses is a business expenses.
  4. If you have purchased an electric vehicle, you will be able to avail a benefit of about Rs.2.5 lakh during the entire term of the loan.
  5. If you have taken a car loan to purchase an Electric Vehicle (EV), you can now enjoy a tax rebate of Rs.1.5 lakh on the interest paid.