What the loan can be used for
- Purchase of a new four-wheeler for personal use by an individual.
- Purchase of a pre-owned four-wheeler, provided the vehicle is not older than 3 years.
- Purchase by companies and firms for professional use — vehicles used by their directors or employees.
Where we come in. Dealer-arranged finance is convenient and almost always more expensive. We place the same purchase with a government bank, where the rate is set by your credit score rather than by a showroom commission.
Vehicle loan eligibility
- Nationality
- Resident Indian citizens and Non-Resident Indians (NRIs)
- Age
- Minimum 18 years, maximum 75 years
- Applicants
- Individuals may apply singly or jointly with other eligible individuals
- Maximum Applicants
- Restricted to 3 — the main applicant plus a maximum of 2 co-applicants
- Non-individuals
- Companies and firms, for vehicles used by their directors or employees
How much you can borrow
- Minimum
- No ceiling
- New four-wheeler
- No ceiling on the maximum loan amount
- Old four-wheeler
- ₹20 lakh, for vehicles not older than 3 years
Margin — your share of the cost
| Vehicle type | Salaried, salary account with the bank | Salaried, no salary account | Other than salaried |
|---|---|---|---|
| New four-wheeler | 10% | 10% | 10% |
| Old four-wheeler | 40% | 40% | 40% |
Swipe the table sideways to see all columns.
Interest rate by credit score
This is the part that rewards preparation. The rate is set off the bank’s External Benchmark Lending Rate (EBLR) and adjusted purely by your credit bureau score — so a few points of score improvement before you apply is worth real money over seven years.
New four-wheeler
| Credit score range | EBLR adjustment | Final interest rate |
|---|---|---|
| 800 and above | EBLR − 0.45% | 8.80% |
| 750 – 799 | EBLR − 0.25% | 9.00% |
| 731 – 749 | EBLR + 0.20% | 9.45% |
Old four-wheeler, not older than 3 years
| Credit score range | EBLR adjustment | Final interest rate |
|---|---|---|
| 700 and above | EBLR + 3.60% | 12.85% |
| Below 700 | EBLR + 3.70% | 12.95% |
The gap is enormous. A pre-owned car costs roughly four percentage points more than a new one, and a score below 731 can take you out of the best band altogether. Check your score before you visit the showroom, not after.
Repayment, charges and security
Repayment tenure
- New four-wheeler — up to 84 months.
- Old four-wheeler — up to 60 months.
Moratorium
No moratorium is permitted under the scheme. Repayment begins from the month following disbursement.
Processing charges
A flat ₹1,000 plus GST for a four-wheeler — a fixed fee rather than a percentage, which makes government bank finance markedly cheaper on larger purchases.
Prepayment penalty
There is no prepayment penalty where the loan is adjusted from your own verifiable sources.
Security
- Hypothecation of the vehicle purchased out of the bank’s finance.
- The bank’s lien is noted with the Road Transport authorities.
Guarantee requirements
- Individuals — no guarantee required. A third-party guarantee from a person with means equivalent to the loan amount is taken only where the applicant’s or co-applicant’s credit bureau score is below 700.
- NRI applicants — a third-party guarantee from one or two local resident Indians, acceptable to the bank and with means equivalent to the loan amount.
- Companies — a guarantee from the promoter or director is required.
- Partnership firms — a guarantee from all partners is required.