Car Loan Checklist: 9 Things to Verify Before You Sign

A lower interest rate isn't always the cheaper loan. Before you sign, check these nine points on the sanction letter — not just the brochure.

1. Rate type. Fixed or floating? A floating rate can rise with the repo rate.

2. Processing fee. Usually 0.25–1% of the loan; ask for it to be waived.

3. Foreclosure charges. Many lenders charge 3–5% if you close early.

4. Part-prepayment rules. How often, and the minimum amount.

5. Bundled insurance. You can buy motor insurance from any insurer.

6. Total interest outgo. Compare this figure, not just the EMI.

7. Loan-to-value. Higher LTV means a bigger loan and more interest.

8. Hypothecation removal. Ask how long the NOC takes after the last EMI.

9. Late-payment penalties. Know the grace period.

Use the EMI calculator first

Try different tenures in our EMI calculator. A 7-year loan lowers the EMI but can add lakhs in interest compared with 5 years.