If purchasing a car is your dream, but you don’t have enough funds to finance the purchase you will be happy to know that purchasing your desired car is no more beyond your budget. Even if you don’t have sufficient cash in your account to fund your purchase, you can still own a car without making any down payment to the car company. Wondering how? All you need to do is to opt for a car loan from a bank which offers 100% funding for car loans and buy a car without any financial stress. 

Understanding 100% car financing

100% car financing is very popular and highly opted these days. While banks usually finance up to 80% to 90% of the total price of the car under a car loan, there are certain banks which offer up to 100% of the car cost. Under this scheme, banks finance the full on-road price of the vehicle along with other benefits. In a 100% car financing contract, the buyer needn’t make any down payment before the purchase of the car. The entire cost of the car will be funded by the bank from where the loan is being taken. The borrower just has to pay the EMIs on a monthly basis throughout the entire loan tenure and repay the loan within the specified period.

100% financing loans are ideal for people who want to drive their dream car home without paying any upfront money. Such loans not only enable an individual to purchase a brand-new car without making any down payment but also allows him/her to own a car which he/she couldn’t have afforded otherwise. Since banks offer full car finance at relatively higher risk, the interest rates are generally high compared to a loan that is taken against a down payment. The eligibility and documentation process of such loans are also relatively stricter.

Do banks really offer 100% funding for car loans? 

Yes, several top banks and financial institutions in India offer 100% funding for car loans to make the dream of every car lover come true. This means while you purchase a new car by taking a car loan from any of these banks, you needn’t pay any upfront amount against the purchase. The entire cost will be borne by the bank. Since such a deal sounds too good to be true, car buyers often feel sceptical to avail a 100% car loan. However, the fact is banks really offer 100% financing on new cars and if you are comfortable with the interest rates charged, it is safe to opt for such loans for purchasing a car. However, banks will carefully assess your credit history, repayment ability, and financial stability before approving the amount. Hence, how much funding you will get largely depends on your individual portfolio and credit record.

Eligibility to get 100% funding for your car

There is a misconception that banks claim to offer 100% funding for cars, but they don’t offer the same. The fact is, even though banks offer 100% funding, how much a borrower will finally get totally depends on his/her eligibility and credit profile. Banks are very strict with their eligibility criteria in case of such loans and offer full funding only to those borrowers whom they think to be the most eligible and creditworthy. Hence, in order to get 100% financing at a great rate, it is mandatory to fulfil all the eligibility criteria set by the lender.

Banks, generally, make their best financing deals to people who have an excellent credit history. In that case, based on your credit record, income, and repayment ability, the banks will decide the amount of funding that you are eligible for. If your credit score is not what the lender is expecting, your chances of qualifying for a 100% car financing is likely to be less. However, if you have a good credit record and have done previous transactions with a bank, your chances of getting preference is relatively higher as banks look for reliable and trustworthy borrowers in this respect. 

Here are the basic eligibility criteria for getting 100% car funding – 

AgeMinimum 25 years
Residential StabilityMinimum 2 years
IncomeMinimum net annual income of Rs.3 lakh
EmploymentMinimum 3 years 
CIBIL Score800 or more with no negative repayment behaviour
Bank BalanceMinimum 3 times of the proposed loan amount
DocumentsOfficial ID CardBank Statement validating salary creditForm 16 for salaried individualsOffice entity proof as VAT Registration Service Tax registration along with current account statementAll KYC documentsDocuments related to ITR for non-salaried individualsOther relevant documents
FOIRLess than 50% of the salary

Banks that offer 100% finance for car loans in India

The following banks in India offer up to 100% funding on the purchase of a new car against a fixed interest rate:

  • Axis Bank
  • HDFC Bank
  • ICICI Bank

Other than these leading banks, there are several other financial institutions, NBFCs, and captive lenders who provide full funding for cars.

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