As 2025 approaches, the festive vibes of New Year can be seen everywhere. With the people preparing to bid adieu to the year 2024, it’s the time of celebrations, joy and cherishing the accomplishments. It is also an ideal time when people make major purchases and plan the year ahead. It could be the perfect time to drive home your dream car with many lenders offering attractive financing options on both the used and new vehicles.

However, purchasing a new car often requires a huge sum of money and availing a car loan can help to split the cost of the purchase into small monthly instalments. Applying for a car loan is easy and convenient, but understanding the loan eligibility criteria is important to finalise the best loan offer.

Though the car loan eligibility criteria mostly remain similar, a few conditions may differ from lender to lender.

Car Loan Eligibility Criteria

Most of the lenders provide car loans with simple eligibility requirements and minimal paperwork. You can qualify for a car loan if you are an Indian resident aged between 18 and 60 years and have a CIBIL score of 700 or more. If you are a salaried individual, you should have a minimum monthly salary of Rs 25,000.

However, individuals who are self-employed need to submit an ITR proof of the last 2 years. Additionally, partnership firms, private limited companies, proprietorships, trusts and others can also apply for a new car loan.

For instance, the age limit is 21 years to 60 years to avail a car loan from HDFC Bank for salaried individuals. The borrower should have had a job for at least two years, with a minimum of one year with the current employer.

Documents Required

To complete the car loan application, you must submit a few documents in addition to meeting these basic eligibility requirements. The required documents are PAN card, employee ID card, salary slips, bank account statements and KYC documents like Aadhaar/ passport/ voter ID/ driving licence/ letter from NPR/ NREGA job card.

Factors affecting loan eligibility:

1. Credit score: A higher credit score improves your chances of approval and may entitle you to cheaper interest rates. Lenders use this score to determine your creditworthiness based on your credit history.
2. Debt-to-income ratio (DTI): This ratio reflects your monthly debt payments to your total monthly income. A lower DTI suggests greater repayment capacity and increased eligibility.
3. Income and work stability: Lenders assess your income and job stability to ensure you can repay the loan. A consistent income stream lowers the risk for lenders.
4. Loan amount and down payment: Your eligibility is affected by the amount you want to borrow and the down payment you can afford. A bigger down payment lowers the loan amount.