Car Loan Eligibility

(Car Loan Eligibility – How It Works)

Be it a school, a college or an organization, each of these institutions follow a strict criteria of eligibility when admitting candidates or applicants. This eligibility criteria is put in place for a special reason, which is to ensure only candidates suited for that specific stream or field of academics or profession are admitted.

Source of Income & Financial Stability

Car loans, like any other loan, also function in a manner which is similar. In order to get a car loan, one needs to meet the eligibility criteria listed by the respective bank or lending institution providing the finance. However, the car loan eligibility criteria differs for different individuals as banks consider the risk factor. Since there is a sum of money involved, banks have to ensure the financial capability of the applicant before issuing them a loan. Hence, the source of income of a borrower and their credit history are two of the most important factors which banks consider while issuing a car loan.

On the basis of source of income, banks classify applicants into various categories. For example, the criteria may be different for salaried individuals who are employed with an organization and have a steady stream of income by way of their salary. Similarly, the car loan eligibility criteria may be different for self-employed individuals who own a business and have a self-generated source of income.

Many banks have a special loan eligibility criteria when it comes to priority or privileged customers or High Net Worth Individuals (HNIs) who are associated with the bank. Also, individuals permanently employed with the state/central government, public sector organizations and companies and reputed schools or colleges might undergo a different eligibility criteria altogether when it comes to car loans.

Axis Bank Car Loan – Eligibility Criteria

To better understand how this works, we have taken the example of the eligibility criteria listed by Axis Bank, one of India’s leading banks which offers attractive deals on car loans. The bank has listed out separate categories of individuals who are eligible to avail a car loan based on their source of income, subject to term and conditions.

Salaried Individuals

• Must be a minimum of 21 years of age
• Must not be more than 70 years upon loan maturity
• Must have a minimum net annual salary of Rs 2.4 lakh per annum
• Income eligibility will be determined based on the latest salary slip and Form 16
• Must have been employed with the current organization for a minimum of one year

Self-employed Individuals

• Must be a minimum of 18 years of age
• Must not be more than 75 years upon maturity of loan
• Must have a minimum net annual business income of Rs 1.8 lakh per annum
• Income eligibility will be determined based on the Income Tax Returns
• Must have been employed with the current business for a minimum of 3 years

Self-employed Non-Individuals

• Must have a minimum net annual business income of Rs 1.8 lakh per annum (for select car models) and Rs 2.0 lakhs per annum (for other car models)
• Income eligibility will be determined based on the latest 2 year’s Income Tax Returns and audited financials of 2 years in addition to computation of income.
• Must have been involved in the present line of business for a minimum of 3 years

 Priority / Wealth / Privileged Customers

• Must have an Average Quarterly Balance (AQB) of Rs 1 lakh for the previous 2 completed quarters (AQB requirement must have been met for both the quarters)

Existing Axis Bank salary account holders (for the past 3 months) and employees of Public Limited & Private Limited companies, MNC’s, permanent employees with State/Central Govt./Public Sector Undertakings and reputed academic institutions

• Must be a minimum of 21 years of age
• Must not be more than 70 years of age upon loan maturity
• Must have a minimum net annual income of Rs 2.40 lakh per annum
• Income eligibility will be determined based on the latest salary slip and Form 16.
• Must have been employed with their present organization for a minimum of 1 year.