Auto Loan

Terms and Conditions:

1. Loan Nature & Eligibility:
   • An Auto Loan is a secured loan provided for the purchase of new or used vehicles.
   • The vehicle financed will act as security (hypothecation) to the lender until full repayment.
   • Eligibility depends on:
     • Income and repayment capacity
     • Credit score and financial history
     • Employment or business stability
   • The institution reserves the right to approve or reject applications as per internal credit policies.
2. Loan Amount & Margin:
   • The loan amount is sanctioned based on the on-road price of the vehicle and borrower eligibility.
   • Typically, banks finance 80%-90% of the vehicle cost, and the remaining amount is paid by the borrower as margin/down payment.
3. Documentation & Verification:
   • Applicants must submit:
     • KYC documents (Aadhaar, PAN, etc.)
     • Income proof (salary slips / bank statements / ITR)
     • Vehicle quotation/invoice
   • The vehicle must be registered with the appropriate authority, and the lender's hypothecation charge must be endorsed in the RC (Registration Certificate).
4. Interest Rate:
   • Interest rates may be fixed or floating, depending on the lender's policy.
   • Rates are determined based on credit profile, loan tenure, and market conditions.
   • Interest is calculated on the outstanding loan amount.
5. Loan Tenure & Repayment:
   • Loan tenure generally ranges from 1 to 7 years, depending on eligibility.
   • Repayment is done through Equated Monthly Instalments (EMIs) consisting of principal and interest.
   • Borrowers must ensure timely payment; repayment obligation continues irrespective of vehicle condition or delivery issues.
6. Charges & Fees:
   • Applicable charges may include:
     • Processing fees
     • Documentation charges
     • Late payment / penal charges
     • Prepayment / foreclosure charges
   • All charges must be disclosed in the Key Facts Statement (KFS) before loan sanction.
7. Prepayment & Foreclosure:
   • Borrowers may prepay or foreclose the loan, subject to terms specified by the lender.
   • Prepayment charges (if any) will be clearly mentioned in the loan agreement.
8. Insurance (Optional but Recommended):
   • Comprehensive vehicle insurance is generally mandatory for the financed vehicle.
   • The insurance policy may be assigned in favor of the lender to protect against risks.
9. Ownership & Security:
   • The borrower is the owner of the vehicle; however, the lender holds a hypothecation right until the loan is fully repaid.
   • A No Objection Certificate (NOC) is issued after full repayment to remove hypothecation from the RC.
10. Default & Recovery:
    • Delay or non-payment of EMIs may result in:
      • Penal charges
      • Negative impact on credit score
      • Repossession of the vehicle (as per legal procedures)
    • Continued default may lead to classification as Non-Performing Asset (NPA) and recovery proceedings.
11. Transparency & Borrower Rights:
    • The lender must provide:
      • Loan agreement
      • EMI schedule
      • Key Facts Statement (KFS) with all charges and terms
    • All terms must be communicated clearly before loan acceptance.
12. Amendments & Regulatory Compliance:
    • Auto Loans are governed by RBI guidelines and applicable laws in India.
    • Terms and conditions may be revised from time to time as per regulatory changes.