In a zero down payment car loan, the customer does not have to pay any upfront amount when purchasing a car. The bank or finance company finances the entire amount, which is later repaid through EMIs. This facility is beneficial for those who wish to buy a new or second-hand car without spending their savings, provided conditions like credit score and income are met.
Zero Down Payment Car Loan: Buying a new car has now become easier, as many banks and finance companies are offering zero down payment schemes. Under this plan, the customer does not have to make an upfront payment for the full price of the car, and the bank or finance company provides the entire amount, repaid via EMIs. Institutions like SBI, HDFC, Axis Bank, and Bajaj Finance offer this facility. However, eligibility depends on conditions such as credit score, income, and age.
How the Zero Down Payment Scheme Works
In a zero down payment scheme, the customer does not need to pay any large sum at the showroom when buying a car. This means the entire cost of the car is financed by the bank or finance company. Subsequently, the customer gradually repays the loan through EMIs. This implies that not a single rupee will leave your pocket when purchasing the vehicle.
Let's understand with a simple example. Suppose you go to buy an electronic item worth 60,000 rupees. Normally, you would have to pay a down payment of 10,000 rupees or more. But by choosing the zero down payment option, you can take it home without paying a single rupee upfront. The same method applies to purchasing a car.
How to Get a Zero Down Payment Car Loan
Many banks offer zero down payment facilities to their existing customers through pre-approved car loans. If you have a good credit score or sufficient income, you may also be eligible for this benefit. Generally, the tenure for such loans is up to 7 years. However, processing fees are definitely charged along with the loan.
Interest Rate and Expenses
The interest rate on a regular car loan typically ranges from 8.75 percent to 9 percent. However, for a zero down payment loan, this rate can go from 9 percent to 10 percent. This loan usually covers the car's ex-showroom price, registration, road tax, and insurance. If you opt for accessories, you will have to bear their cost yourself.
For the loan, customers may be asked to provide an Aadhaar card, PAN card, address proof, income-related documents, six months of bank statements, and in some cases, guarantor details.
Which Banks Offer This Facility
Leading banks and finance companies in the country, such as SBI, HDFC, Axis Bank, and Bajaj Finance, offer the zero down payment facility. Their application process is simple, and fewer documents are required. However, not everyone is eligible for this scheme. Banks determine eligibility based on credit score, income, and other essential criteria.
Benefits of This Facility
This scheme is beneficial for those who wish to purchase a vehicle without spending their savings. Additionally, it proves helpful for individuals who do not have sufficient funds for a down payment. This facility can apply to both new and second-hand cars. However, it is essential to meet conditions such as your income, age, employment, and credit score.
Many banks and finance companies also offer online application facilities. Customers can apply for their loan through websites or apps. Subsequently, the bank reviews the documents and grants loan approval. In some cases, the final approval from the bank is received directly at the showroom, allowing the customer to take the vehicle home without any upfront payment.
