The Hindu Business Line : Banks following stringent norms for car loans

New Delhi, March 16 In spite of falling interest rates, car loans are not going to become easier to come by. This is because banks have made credit appraisal norms more stringent by making minor modifications in the documents that they are now asking from applicants.

Earlier, two years of work experience and one year’s Form 16 — the annual statement from the employer on tax deduction — was sufficient. But now chances are that the bank will insist on Form 16 for both years. Some private banks are asking the applicant to also give three to six months’ old mobile bill to ensure accessibility. For self-employed businessmen, banks require income tax returns for the previous three years.

Their borrowing limit has also been reduced.

“We no longer accept any surrogate documents like a two-three years’ credit card statement of a borrower. In the past it could have been used as a yardstick to know about his bank statement and his credit limit. If the credit limit is up to 2 lakh or so, we would consider giving a loan. But now these documents do not substitute for a bank statement,” said a private sector bank official.

“When the economy was booming, we were willing to take the risk of lending to even a self-employed businessmen with just two-three years of experience. But based on past mistakes and track records, we have now raised the eligibility to 30 years unless he can get a co-applicant,” conceded the official of another private sector bank.

More Stories on : Cars | Consumer Finance | Credit Market

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