Want to buy a car and no cash ! Go for car loans

Buying a car in India, is still a luxury thing. But slowly things are improving and buying a car is becoming a necessity for many people. With the changing climatic more and more people are preferring to slip into comfortable lifestyle zone to avoid the atrocities of the weather. Moreover the spending ability of an average individual is growing day by day. Also, increased infrastructural facilities in the country are encouraging the individuals to buy cars. In this scenario, car loans are playing a major role in tempting normal individuals to buy a car. Not only middle class, but also the wealthy people are opting for car loans. Most of the middle class people, are salaried and opt for car loan because they can't afford to pay the full down payment. In general, wealthy people include professionals or businessmen and they also opt for car loan, as they get tax exemption on the interest paid.

There is a tax exemption for people, who declare income under the head, profits or gains from business or profession. So, the professionals and business men, have a tax exemption on the interest paid on car loan. But salaried people has no tax exemption for the interest paid on the same loan. Nowadays, there are so many financial Institutions and banks, who disburse loans for vehicles especially for both new and used cars. However, some main points that one need to keep in mind before taking a car loan are

Interest rates- There are two types of interest rates, floating rate and fixed rate. Choosing the interest rate depends upon the risk taking capacity of the individual and also on the ability to analyse the interest rate movement for the next five years. Fixed rate hardly has any risk element involved but floating rate involves the risk of getting affected as per the fluctuations observed in the market.

Documents required- The main documents that are necessary for procuring a car loan are Identity proof- like passport, PAN card etc. Secondly, Proof of Residence- again driver's license, ration card etc. Thirdly, Income Proof- latest salary slip, form 16 for the last financial year and bank statement for last 6 months and self employed must provide Income Tax return for the last two years.

Also one must take car insurance in order to overcome any uncertainty. There are so many Insurance companies these days which provide car insurance with moderate premium payments.


Car insurance is been categorized into 3 cases Loss or damage to the vehicle case, Personal accident and Third party legal liability where an individual gets coverage.