Read This Car Loan Documents Checklist in 5″ And Save Time

Introduction

Everyone eligible for a car loan can proceed with the documentation process when applying for a loan with a lender. But how do you know if you have the documents handy before inquiring about a lender or even shopping around for a car without a car loan documents checklist?

Most financiers ask for the standard documents required to get the loan processed, such as identity, address, and income proof documents. Although these are not all the documents requested by a lender and may vary from bank to bank, an understanding of what you will need will give you a hold on asking the right questions when the bank requests additional documents.

Whether you are a salaried or a self-employed individual, the procedure is the same for most financial providers with some additional proof for a business owner such as ITR or profit loss statements. Now, let us look at the car loan documents checklist to understand the list of documents you need to submit as an auto loan applicant.

Income Proof

The first component of a car loan documents checklist includes income proof. This may not come as a surprise considering most banks need a proof to consider sanctioning a loan to a borrower depending on their repayment capabilities. Which lender would want to lent his money when he does not know if the borrower is going to repay his loan with interest or not?

As said earlier, while considering a loan on any purchase, the lender is more interested in your income proof to know that you are capable of paying back your loan with interest in time. They will likely want to calculate your repayment capacity against your recent pay history, receipts, bank statements, and even how long you have been employed at your employer.

Your income proof is what is considered to be: Salary slips for the last 6 months, Employment Certificate, Form 16, and ITR documents for salaried individuals. ITR up to 2 years, profit loss statement, and balance sheet for self-employed individuals.

Proof Of Residence and Identity

The second most important component of a car loan documents checklist is however the practical proof of contact for the lender.

This gives them confidence in your credibility and where they can find you if things go haywire. To minimize the risk of fraudsters, lenders will want to make sure that they can trust you with your contact information. These proofs may be simply anything from a voter ID, passport, PAN card, driving license, Aadhar card, or even Form 60. You may also be requested to submit age proof to make sure you meet the eligibility (PAN / Driving Licence/ Passport/ Birth Certificate)

Additional documents accepted for address proof include Electricity Bill/Ration Card, Copy of Utility Bill/Insurance Bond/Bank Statements/Income Tax Assessment Order/Property Registration documents/Pensioner Book/Property Tax Receipt/Employer Certificate

Moreover, a signature proof will be asked by the lender to verify the authenticity of your signature on the loan documents.

CIBIL Score or Credit History

Now, this is as important as income proof for most lenders. Though not everyone will want to know your CIBIL score or credit report, if you want to lower your interest rates on your loan, providing the credit history will help you get one.

Your credit report directly displays your ability to pay bills, debts, and fees on time. This will give your lender complete trust in your financial ability to repay the loan without any delay in the future. A credit score of 750 or above is an indicator of your timely payments and clean record, this will get you better deals on your loan with attractive offers of lower interest rates and EMIs. You can even waive your down payment if you have an excellent credit score.

This is where you can make the most bargain with your lender to reduce your interest. Information like your full name, social security number, and date of birth will help your lender inquire about a full credit report from one or more agencies you have a credit history at. You automatically become a creditworthy individual if your credit score and history are good. On the other hand, you may face some difficulties in getting a loan if your credit score is poor. The lender may ask you for a guarantor or additional bank statements before approving the loan and may also charge higher interest rates depending on your score.

Vehicle Information

If you are applying for a pre-approved loan, you could always change the decision in the future if you are looking for a different option than the pre-committed one by contacting the lender. But in this case, the lender may ask you the make and model of the vehicle you are looking for to determine the loan amount. And once you have made a move on the car, you will need to provide the lender a copy of the sales agreement from the dealer or the sale deed – if purchased from an individual. These documents may include a proforma invoice, VIN(vehicle identification number), sales agreement as mentioned above, and RTO document of the vehicle registered with your name.

Insurance Proof

Insurance proof in the car loan documents checklist is an optional component. However, remember that most banks do not sanction loans on usable commodities or assets when the borrower has not insured. This is to attest safety on the vechile, since the vehicle itself on the loan is the collateral. Therefore, you need to check with the bank on their policy and know if the bank will allow the borrower to apply for a loan without insurance.

But, if you have insurance proof on the car, the bank would want to know the details on the document showing the insurance proof on the registered vehicle you took the loan for. This is one of the post-sanction documents you will need to provide the lender after you have brought the vehicle. These may also include signed ECS, security PDC, signed bank agreement copy, etc,…

Apart from these, car loan documents checklist is not limited, you will need to submit some other specific documents mentioned by the lender. These may include RC copy if owned, balanced margin money report, board resolution, or others.

The Bottom Line

Now that you know the components of car loan documents checklist, once you have checked the eligibility required by the lender to sanction a loan, you will need the documents mentioned above for the loan sanction process. However, the requirements may vary from lender to lender and you will want to talk to them before you go ahead with submitting the documents. If they ask you for any additional documents, double-check with them the reason for the requirement.

Having followed the car loan documents checklist is not the only responsibility of a borrower. It is also highly advisable to read the terms and conditions when signing any agreement with the lender because you would want to know the rules that will apply if anything goes wrong or if the interest rates go up.

If you are still unsure how, give us a call at Blue Carz and schedule a free consultation with our representative, who will take you through the entire process of availing of a loan and let you know the documents required to apply for a loan from the lender of your choice. With Blue Carz you can also get a personalized car loan documents checklist depending on your profile. Grab your discount offers today!