Indian Overseas Bank Car Loan Eligibility

Indian Overseas Bank Car Loans

Car loan from IOB is available on new cars and pre-owned cars, the disbursement of loan in semi-urban and rural regions is predominantly on pre-owned vehicles. The vehicle loan is also extended to new two – wheeler as well. The auto loan extended to pre-owned vehicles is restricted to vehicles which are not older than 5 years.

IOB Car Loan Eligibility Criteria

Car loan from IOB is extended to salaried or self-employed professionals, the official website lists the criteria on employment for availing car loan from IOB.

The applicant should have permanent employment in -

• A Government Office
• A public sector undertaking
• A reputed private enterprise or
• A self-employed professional
• The loan can be applied for in the name of the firm or company

Non-Resident Indian can also apply.

(For NRIs subject to condition of obtaining a suitable guarantee from Resident Indian acceptable to the Bank)

Income Eligibility

The applicant should be employed in confirmed service with a take home pay of more than 50% of the gross salary, after PF and Insurance deductions. The total monthly income of the applicant including that of spouse and other income should be not less than Rs. 8000/- p.m. in the case of loan for purchase of car and Rs.5000 in the case of loan for purchase of 2-wheeler. Among the other documentations that needs to be provided, the prospective borrower should provide for income proof (Form 16 or ITR) along with bank statement pertaining to past 6 months.

Factors that affect the car loan eligibility with respect to IOB

The following factors are known to affect the eligibility while availing car loan from IOB.

• Credit score – Credit score represents the credibility of the applicant. The higher the credit score, the better is the credibility of the individual. Better credibility enables the applicant to negotiate favorable terms.
• Age criteria – IOB car loans are available for individuals who fall within the age of 21 – 65 yrs. A lower age provides the advantage of elongated tenure of loan, which will reduce the EMI (monthly outlay). This will reduce the risk perception for the bank, thus lending at favorable terms.
• Income criteria – Higher income is indicative of better repayment capacity. This is also a factor which will enable negotiating favorable terms on the car loan.
• Stability of income – There is a necessity for continued income for all types of applicants. This is mentioned in the official website of the bank. An applicant should first check for the eligibility criteria before applying for car loan. This will reduce the chances of loan rejection.
• Existing debt – The existing debt commitment will indicate the repayment capacity of the individual. The higher the commitment, the lower will be the repayment capacity on a monthly basis.

How can you improve the eligibility criteria for a car loan?

An applicant can undertake these initiatives to improve credit score –

• Closure of outstanding loans – Pre-closure of loans with excess funds available can help reduce the monthly commitment. This will lead to better debt management and increase the repayment capacity.
• Making prompt credit card payments – Payment of EMIs and credit card balance should be prompt, thereby enabling improvement in credit scores. Defaults on credit card dues not only increase the liability (penal interest) but also reduces the repayment capacity.
• Closure and surrender of credit cards – If the individual has more number of cards, then one should consider rationalizing them by surrendering few credit cards. This is a sign of good debt management. This initiative will improve the credit score drastically. Also, this will lead to savings on annual fee and other charges applicable on the credit card.
• Bring in co-applicants – The applicant can apply for car loan jointly along with any family member. Typically, one would add spouse, father, mother or siblings as co-applicant. The co-applicant should have a decent credit score as well. The co-applicant can be a close relative and the car need not be purchased in their name.

Loan to value ratio applicable in the case of car loan availed from IOB

The loan to price of the vehicle will differ based on whether the vehicle to be purchased is new four-wheeler, pre-owned four-wheeler or new two-wheeler

• New car – Up to 90% cost of the car.
• Used car – Up to 75% market value of the car.
• New two-wheeler - 90% cost of the vehicle or 10-times the gross monthly income or Rs.60,000/- whichever is lower.

Car loan eligibility calculator

Car loan eligibility calculator provides a rough assessment of the amount that needs to be laid out as monthly installment against the quantum of loan borrowed. Basic details such as type and model of car, quantum of loan, tenure, existing debt, income, credit score are required to determine the eligibility. The EMI determined by the calculator is only indicative and does not entail the final value that may need to be committed.

Repayment schedule and security requirement against car loan availed from IOB

The maximum tenure for which the car loan will be extended by IOB is 7 years. For a used car, the maximum tenure will reduce by the age of the vehicle.

• New car - Repayable in 84 equated monthly installments
• Used car - Flexi repayment shall be fixed with a maximum of 84 months for lower age of the vehicle

Car loans do not call for additional guarantee or surety, there is no requirement for third party guarantor for these loans. The underlying asset which is bought will be hypothecated against the loan so borrowed. The bank will have the right to auction the underlying asset and close the loan in full in the event of non-payment or lapse in payment of installments by the borrower. The security against the loan is established in the following manner by the bank –

• Hypothecation of the vehicle purchased
• The Banks lien on the vehicle should be marked in the R.C. book
• Vehicle should be insured for the full value with the bank clause

Interest rates applicable on car loan availed from IOB

The type of loan and the interest rate is as mentioned in the table below. The lowest interest rates is 9.2% which is in-sync with many other bank’s offerings. The official website of the bank updates the rate of interest from time to time and hence, it is advised that the borrower checks the website before assessing the best rates and best bank for borrowing the requisite loan.

Documentation required for IOB car loans

The below documents are required to be submitted by the car loan aspirant, the application will be processed based on eligibility criteria and the disbursement or sanction will be processed as required.

• Application form
• ID Proof (a certificate of birth, driver’s license or photocopy of passport for real persons of Turkish citizenship, passport or residence permit for real persons of foreign citizenship)
• Income Statement (Last month’s payroll sheet for salaried employees; if the payroll is printed on paper with the firm's letterhead, the firm’s signature circular is also required; tax statement for the self-employed)
• Pro forma bill / photocopy of car certificate.
• Trade registry gazette for the self-employed/ business owners.
• The original electric, water, gas or telephone bills of the home address that appears on the application form (Bills should be issued in the applicant’s name or to a family member with the same last name).
• Additional documents or guarantees may be required according to the loan conditions desired. If a guarantor is required, the same documents must be submitted by your guarantor.

Frequently asked questions: IOB Car Loan Eligibility

1. Who can apply for car loan from IOB?

Car loan from IOB can be extended to both salaried and self–employed professionals. NRIs are also allowed to apply for car loan from IOB.

2. What is the minimum interest at which car loans are extended from IOB?

The minimum interest at which car loan is extended from IOB is 9.2% p.a.

3. What is the maximum tenure for which car loans are extended from IOB?

The maximum tenure applicable for car loan against a new car is 7 years, for a used car, this maximum tenure is reduced by the age of the vehicle.