A Comprehensive Guide to Checking Your Car Loan Eligibility

Owning a car is a dream for many Indians, but the high upfront cost can make it challenging to realize this dream without financial assistance. Car loans provide a viable solution, enabling aspiring car owners to drive their dream vehicles home. However, before applying for a car loan, it’s crucial to check your car loan eligibility. We are here to provide you with a comprehensive guide on how to check your eligibility for a car loan, empowering you to make informed borrowing decisions.

Your Credit Score

Your credit score is a key factor that lenders consider when evaluating your car loan application. It reflects your creditworthiness based on your past credit behavior. A higher credit score improves your chances of loan approval and may even qualify you for better interest rates. Request a copy of your credit report from credit bureaus and ensure there are no errors. If your credit score is below the desired range, focus on improving it before applying for a car loan.

Your Age

To be eligible for a car loan in India, an applicant must typically meet the minimum age requirement set by the lending institution. The minimum age requirement for most lenders is usually between 21 and 70 years. This requirement ensures that the applicant is legally an adult and capable of entering into a financial agreement.

Your Employment Status

Lenders assess the applicant’s employment stability to determine their repayment capacity. Salaried individuals are typically required to provide documents such as salary slips, Form-16, and bank statements as proof of regular income. Applicants with a reliable and steady source of income are more likely to be eligible for a car loan because it assures the lender that the borrower can meet the monthly loan obligations without defaulting.

Your Debt-to-Income (DTI) Ratio

Your debt-to-income (DTI) ratio is the percentage of your monthly income that goes toward debt repayments. Lenders use this ratio to assess your ability to handle additional debt, such as a car loan. Calculate your DTI by dividing your total monthly debt obligations by your gross monthly income and multiplying the result by 100. A lower DTI is preferable because it indicates that you have sufficient income to manage the car loan alongside existing debts.

Loan Amount and Down Payment

Before applying for a car loan, determine the loan amount you need based on the car’s cost and the down payment you can afford. Lenders often offer up to 80-90% of the car’s value as a loan, and the rest must be covered through a down payment. A higher down payment can improve your eligibility and result in lower monthly EMIs.

Co-applicants or Guarantors

If you find that your individual eligibility falls short, consider adding a co-applicant (like a family member) or a guarantor to strengthen the application. A co-applicant shares equal responsibility for loan repayment, while a guarantor serves as a backup in case the primary borrower defaults.

Stepwise Process to Check Car Loan Eligibility

Step 1- Assess Your Monthly Income

Determine your gross monthly income, which includes your salary or any other regular sources of income. For self-employed individuals, consider the average monthly income over the past few months.

Step 2- Calculate Your Debt-to-Income (DTI) Ratio

Calculate your DTI by dividing your total monthly debt obligations (existing loan EMIs, credit card dues, etc.) by your gross monthly income and multiplying the result by 100. Lenders generally prefer a DTI below 40-50% for car loan applicants.

Step 3- Estimate Your Monthly Expenses

Evaluate your monthly expenses, including rent/mortgage payments, utility bills, groceries, and other regular costs.

Step 4- Determine the Loan Tenure

Decide on the loan tenure (number of months) you are comfortable with for repaying the car loan. Typical loan tenures range from 36 to 84 months.

Step 5- Check Your Credit Score

Obtain your credit score from credit bureaus. A higher credit score (typically 750 or above) enhances your chances of getting a larger loan amount at more favorable interest rates.


Step 6- Research Lending Institution’s Policies

Different lenders have varying policies on loan-to-value (LTV) ratios and maximum loan amounts. LTV ratio refers to the percentage of the car’s value that the lender is willing to finance. Most lenders offer up to 80-90% of the car’s on-road price as a loan.

Step 7- Calculate the Maximum Loan Amount

Based on the EMI you can afford, work backward to determine the maximum car loan amount you might be eligible for. Subtract the down payment you can make from the total cost of the car (on-road price) to arrive at the maximum loan amount.

Step 8- Use Online Eligibility Calculators

Many lenders offer online car loan eligibility calculators on their websites. These tools allow you to input your income, expenses, and other relevant details to check your eligibility instantly. While these calculators provide a preliminary assessment, keep in mind that the final approval depends on the lender’s verification process. 

You use car loan eligibility calculators by lenders like ICICI Bank or credit information providers like BankBazaar

Once you have a rough estimate of the car loan amount you can get, approach the lending institution to get pre-approved for the loan. Pre-approval provides you with a more accurate picture of the loan amount you are eligible for and makes the car buying process smoother.


Checking your loan eligibility is a critical step in acquiring your dream car without financial stress. Assessing your credit score, DTI ratio, estimating the loan amount and down payment, understanding lenders’ criteria, and considering co-applicants or guarantors are essential components of this process. Utilize online eligibility calculators and provide accurate documents to streamline the approval procedure. By being well-prepared and responsible in your approach, you can increase the likelihood of obtaining a car loan and driving off with your dream car.

Amit Arora


I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
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