NRIs staying abroad can now apply for a car loan in India for their family or for their personal use. The car loans are specially designed considering the requirements of the NRIs. The car loans are the conventional car loans but modified to make it easier for the NRIs to avail the loans.
Any citizen of India living abroad and who is salaried or self-employed can apply for the car loan. The requirements differ from provider to provider. The NRIs will be required to open a NRE account to be able to avail a car loan. NRIs can buy either used or new cars and they can avail loan against their current cars in India, top-up loan over the car loan to increase the loan amount on their current car.
Some providers only allow the NRIs to take a car loan only if they have an Indian co-applicant. So, in such an instance the NRI need not have to be physically present while availing the loan.
Features of NRI Car Loans
The features are as follows:
- Borrower or guarantor clause: If the NRI wishes to take a loan in the name of a relative residing in India, he can be the guarantor and the relative who is the resident will become the borrower. The car is bought in the name of the relative but paid for by the NRI.
- Loan amount: The maximum loan amount is calculated on the basis of his income and his repaying capacity and the car value.
- Rate of interest: The rate of interest offered for NRIs in accordance to RBI’s guidelines. Currently the interest rate varies from 10.50% to 15% depending on the banks.
- Repayment term: The repayment period is 1-7 years. This again varies from providers to providers. The loan amount is to be paid each month.
- Credit rating: NRIs are given a car loan after they have checked their track record. The NRIs credit scores and credit behaviour is checked before the loan application is approved.
Documents required to avail a NRI Car Loan
The following documents are the general documents that should be submitted:
- Loan application form
- Hypothecation agreement
- Agreement of guarantee
- Power of Attorney
As a guarantor, you will have to submit the following documents:
- Identity and residential proof
- Passport copy and work permit
- Salary certificate or proof of income
- Credit report
The borrower will need to submit an identity and residential proof.
Banks that offer NRI Car Loans in the UAE
The following are the banks that offer car loans to the NRIs:
- State Bank of India
- State Bank of Travancore
- State Bank of Hyderabad
- Canara Bank
- Federal Bank
- Indian Overseas Bank
Note that the interest rates differ from banks to banks and the highest amount of car loan that will be provided is up to 85% of the value of the car or 48 times the net monthly income of the person borrowing the car. There is also no pre-payment penalty charged, so u can pay off the loan at any time. But there will be a processing fee charged.