The majority of people today buy new cars with finance agreements to divide their costs into several months. Car financing is a hassle-free and quick process that people opt for so that the car’s whole amount is not paid outright, and it helps them pay the car’s cost at equal intervals every month, which does not give a dent in their pockets.
Though car financing is a facility given by every bank, not every person gets the same interest rate. Not everyone can opt for the desired amount as banks do various car finance checks before financing your car. Applying for car finance is a straightforward process, but you’ll need to know the documents required for its application.
DOCUMENTATION REQUIRED AND WHAT CHECKS ARE DONE FOR CAR FINANCE:
IDENTITY PROOF:
To guarantee that the person applying for a loan is not committing any fraud or has no intention of doing any fraud, the lender company asks for your identity proof. Identity proof includes various things:
- Full name
- Date of birth
- Marriage status
- Residential status
ADDRESS PROOF:
Car lending companies will always ask for your address proof for the last three years to ensure that the borrower is genuine and not concealing any information. To make the process easy and fast, make sure that you give your information as accurate as possible as any doubt would further increase the time of your application.
Usually, the lending companies ask for two utility bills with your name, and bank statements are also accepted as identity proof.
BANK STATEMENT:
To make sure that the lender will repay the loan and will not default in terms of repayment, the lending company will check your bank statements. After checking your statements, they know that you have enough money and would not default on EMIs.
They will check your income and expenditures and further study your bank statement, which will help them decide the interest rates or approve or reject your loan.
HISTORY OF EMPLOYMENT:
The lending company will check your employment history to know how long you have been employed and what salary you are drawing and what your job title is.
The lending company will always make sure that nobody defaults in their EMIs. They study the file of every applicant and grant loans to the individual.
For salaried employees, they will check the job title, salary, and the name of the organisation.
For self-employed persons, they will ask for three years of summary accounts.
DRIVER’S LICENCE
The lending company will ask you for the driver’s licence to ensure that you are eligible for the licence and the car to drive. They will make sure that you’re not a minor and know how to drive a car.
If you do not have a driver’s licence, most lending companies will reject your application.
If your driving licence is lost or misplaced, you will need to provide any other type of ID, and the company will further check whether the information provided by you is authentic or not.
CIBIL SCORE:
Cibil score is nothing but a credit history of an individual who is applying for the loan. Every lending company will do a credit check of the person applying for a loan to know the individual’s credit history.
A credit check is a crucial factor for every lending company. It also plays a vital role in determining the amount of loan approved, the interest rate, and whether the applicant’s application is approved or rejected.
A cibil score is a score that helps the company to know your credit history. If it is excellent, you’ll be offered an impressive rate of interest, but if it is not good, the company will charge a higher rate of interest to ease their risks of lending.
You’ll have a poor cibil score if you have defaulted on any of your credit payments or EMIs in the past. So make sure you pay all your credit dues on time to maintain your good cibil score.
TIME TAKEN TO APPROVE YOUR CAR FINANCE?
Usually, it takes 2-3 days for your car finance approval, but it may take more days in case your file does not meet the criteria listed. You might get the finance amount the same day you applied for it, depending on your file. Now you know all the valid documents required for car finance.
When the car finance checks are completed, three things will happen:
Application approved:
Your application is approved as the car finance checks are done by the company that meets all their standard requirements, and once it is done, the car dealer will get the whole amount of finance.
Application rejected:
Your application gets rejected as you have a poor credit score or your file does not meet the company’s standard requirements.
Finance company requires more information:
The financing company needs more information from you, or the information you provide is insufficient, or they have doubts about some of the information provided. Hence, they ask you for more documents.
Before taking car finance, you should study the procedure and offers, rate of interest given by various car financing companies. Companies give discounts on processing fees on festival seasons, and also, a little bargain is what you can do at your end in the interest rates. Now you know the details required by car financing companies for finance, start your easy and hassle-free process now.
