Car Loan Eligibility Calculator
Car loans help you finance your dream vehicle, whether new or used. Assessing your eligibility ensures affordable repayments. Use the Loanpao car loan eligibility calculator to plan your car purchase with confidence.
Calculate Your Car Loan Eligibility
What Is Car Loan Eligibility?
Car loan eligibility is determined by lenders based on your repayment capacity. Key factors include income, credit score, employment stability, and existing debts. Meeting these criteria ensures a smooth loan approval process.
How To Use Car Loan Eligibility Calculator?
To use the car loan eligibility calculator, follow these steps:
- Enter your monthly income and existing EMIs for other loans.
- Specify the desired loan tenure (up to 7 years).
- Input the interest rate offered by the lender (typically 8-15% for car loans).
- The calculator will display your eligible loan amount and monthly EMI.
How Is Car Loan Eligibility Calculated?
Eligibility is based on income, existing debts, tenure, and interest rate. For example:
- Monthly Salary: ₹40,000
- Tenure: 5 years (60 months)
- Interest Rate: 8.5%
Step 1: Calculate the maximum EMI you can afford
Banks allow up to 50% of monthly income for EMIs:
EMI = 40000 × (50/100) = 20000
So, you can afford ₹20,000 per month as EMI.
Step 2: Input values in the formula
The loan eligibility formula is:
P = EMI × [(1+r)^n - 1] / [r × (1+r)^n]
Where:
- P = Loan amount
- EMI = ₹20,000
- r = Monthly interest rate = 8.5% / 12 = 0.007083
- n = Loan tenure in months = 5 × 12 = 60 months
P = 20000 × [(1+0.007083)^60 - 1] / [0.007083 × (1+0.007083)^60]
P ≈ ₹9,56,781.23
Therefore, the eligible loan amount is approximately ₹9,56,781.23.
Car Loan Eligibility Criteria
| Criteria | Details |
|---|---|
| Age Limit | 21 to 65 years |
| Minimum Income | ₹20,000 per month for salaried; ₹3 lakh annually for self-employed |
| Maximum Loan Tenure | 7 years |
| Credit Score | Preferably above 700 |
| Employment | Minimum 1 year with current employer for salaried; 2 years in business for self-employed |
Documents Required For Car Loan Eligibility
- Application Form: Duly filled car loan application form.
- Photographs: Recent passport-sized photos.
- ID Proof: Aadhaar Card, PAN Card, Voter ID, Driving License, or Passport.
- Address Proof: Utility bill, Aadhaar Card, or rental agreement.
- Income Proof:
- Salaried: Salary slips (3 months), bank statements (6 months), Form 16, ITR (2 years).
- Self-Employed: ITR (2 years), bank statements (6 months), business financials.
- Vehicle Documents: Proforma invoice or quotation of the vehicle.
Factors Affecting Car Loan Eligibility
Income
Higher income increases eligibility for larger loan amounts.
Credit Score
A score above 700 improves approval chances and may secure lower rates.
Employment Stability
Stable employment or business continuity assures lenders of repayment.
Existing Debts
High EMIs may reduce eligibility; clearing debts can help.
Vehicle Type
Loan amount may vary based on whether the car is new or used.
How To Improve Your Car Loan Eligibility?
Maintain a Good Credit Score
Pay bills and EMIs on time to keep your score above 700.
Reduce Existing Debts
Lower your debt-to-income ratio by paying off loans or credit cards.
Stable Employment
Consistent job or business history enhances lender confidence.
Choose a Realistic Loan Amount
Opt for a loan amount that aligns with your income to ensure affordability.
Frequently Asked Questions
Banks evaluate income, credit score, existing debts, and tenure, limiting EMI to 50% of income after other obligations.
Up to 7 years, depending on the lender and vehicle type.
Yes, but you may face higher interest rates or need a co-applicant.