When a cousin needed a large sum of money urgently last month but had no jewelry or land to mortgage, he was absolutely lost. Just a month back, he had bought a certified pre-owned car with all his savings. How he wished he had kept the money instead! Now if he wanted to sell the car, he would suffer a major loss. It definitely was not the right time to sell his car. But that was the only thing he could do, or so he thought!

A chance visit to the bank nearby gave him a different solution though. The account manager, on hearing the details, told my cousin that he could avail of a loan against his car. The car, instead of being the liability that he thought it was, actually could become his saviour in his time of crisis. Instead of disposing of it immediately at a loss, it could be used to raise funds against its value.

Who is eligible:

Salaried person aged at least 21 years while applying and reaching a maximum of 60 years on the final loan repayment date. The applicant should have been working for at least 1 year and earning a certain minimum amount per month.


Self-employed person aged at least 21 years while applying and reaching a maximum of 60 years on the final loan repayment date. The applicant should have filed ITR for at least 2 years, with a minimum ITR of Rs 2,00,000.

The car should have a minimum repayment record of 9 months for both salaried and self-employed persons.

What you need to do:

  1. Visit the website of any bank or finance company providing a ‘loan against car’ facility.
  2. Fill in an application form giving your details like car model, manufacturing year, mode of using the car (personal or commercial) etc.
  3. After submitting the completed form a concerned representative will contact you to complete the rest of the formalities like filling up an actual loan application form and attaching required documents. Interestingly, you don’t need a guarantor for this loan as the car itself works as a security.

Documents you need to submit:

  • Your bank account details
  • Copies of last 2/3 years income tax returns
  • Bank statement copy
  • ID proof
  • Address proof
  • Photograph
  • Age proof
  • Driving license


Once the application is submitted, the bank or finance company will commence a verification process followed by valuation to derive the present value of the car based on which the loan can be decided. You can pay the expenses for loan processing and documentation during loan transfer if not paid earlier. Once the loan is approved, it will be disbursed for a tenure of 18 to 60 months. 


Perhaps the easiest loans to avail, loans against cars have a simpler application and approval process. The money is disbursed quickly once the car is verified. The repayment is also easy and loan can be tracked online. The biggest benefit is the car does not have to be sold off immediately, so the moment you arrange for the repayment amount, the car becomes fully yours once more!

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