Can you get a car loan if you are self-employed?

5 Mins March 17, 2022

People often think that getting a new car loan is difficult if you are self-employed. This is a misconception. The process is easy and hassle-free. Just the paperwork is slightly different.

employed person get car loan

Here is what Chirag Jathar, a creative photographer, discovered. Three years ago, Chirag figured out that one of the most recession-proof markets, when it comes to photography was weddings. After all, the "Big Fat Indian Wedding" is an institution as old as time itself. He, therefore, branched off on his own.

While the initial few months were a bit of a struggle (as it always happens in a new venture), thanks to the support from family, friends, and former colleagues, Chirag’s business has taken off.

Initially, he would travel to the wedding venues in cabs and hire equipment such as lights, reflectors, backdrops, props, etc, on an assignment basis. But now that his business is settled, he has invested in buying equipment and often has a couple of assistants to help him out.

Lugging all the equipment and the team in a cab was becoming difficult, and Chirag wanted to buy a new car. He was, however, slightly apprehensive because he had heard (incorrectly) that banks are reluctant to give new car loans to self-employed people.

Chirag was pleasantly surprised when he discussed this issue with his Axis Bank Relationship Manager (RM) and was told that getting a new car loan for the self-employed was as easy as for salaried people. Just the paperwork is slightly different.

Here is what the RM told Chirag:

 Eligibility

  • Age in the 21-65 years range
  • Net annual business income should be a minimum of Rs. 2.00 lakh per annum (varying on the model of the car chosen).
  • The borrower should be in the same business/profession for at least two years.
  • The same income and business age criteria apply if the loan has to be taken in the name of a partnership firm or company. (Doing so could help claim depreciation benefits and make the interest on the car loan deductible as an expense under the Income Tax Act).

[Also ReadBuying Your Car is Easier Than Ever, With These Auto Loan Products]

Documentation

Besides his KYC documents and the car loan application form, Chirag will have to submit the following:

  • Income Tax Returns for two years
  • Bank statements for six months

The RM told Chirag that when evaluating a new car loan application, banks look at criteria like financial position (including other pre-existing loan obligations), creditworthiness (as determined by the borrower's credit score), and employment or business stability, besides factors like the type of vehicle and loan tenure.

The RM said that since all these factors are in order in Chirag's case, he should have no issue in getting a new car loan. What's more, he told Chirag that Axis Bank offers attractive car loan interest rates and flexible tenures. For new vehicles, it provides loans for up to 100% of the on-road costs. Tenures can be as long as seven years. Additionally, it has tie-ups with several manufacturers, leading to exclusive benefits for its customers.

Axis Bank Used Car Loans come with a loan amount of up to 85% of the valuation amount. Through its pan-India tie-ups with dealers, it also offers complete support for the transfer of ownership.

Know more details on Axis Bank car loans for the self-employed online.

Disclaimer: The Source, a content creation and curation firm has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.