4 key things to get best top up on car loan


Many of us pick up car loans without understanding the long term burden that we may be taking on. If you are struggling with the current car loan due to its heavy rate of interest, it is advisable to refinance your car loan with a loan against your car. A fresh loan to pay off your existing car loan is refinancing, which also provides extra money for other needs.

CarDekho offers four key tips on getting the best top-up loan on your car:

  1. Original car loan amount

The original loan amount is the biggest factor that determines car refinancing. One can get a loan up to ₹25 lakh against the car but it is dependent on the model of the car. A higher original loan amount leads to a higher top-up loan amount. For example, if the original loan amount is ₹6 lakh, then the loan against car amount could be anywhere between ₹7-9 lakh, depending on the loan tenure and number of EMIs already paid.

  1. Original Loan Tenure

Tenure of the original loan is important to determine the loan amount against your car. The longer the loan term is, the higher will be its cumulative interest charges to be repaid over that period. But that also means that it will fetch a greater loan amount when one applies for refinancing.

For example, if one has an EMI of ₹15,000 for an original loan amount of ₹4 lakh and a loan tenure of 24 months, he/she will get a new loan of approximately ₹4,91,759. Out of this, ₹2,18,759 will go towards the foreclosure of the existing car loan, while he gets ₹2,73,000 as extra top-up amount as cash in hand.

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But if the loan tenure is longer, say 48 months, the refinance will fetch approximately ₹5,56,490. However, the extra cash in hand amount will remain the same (₹2,73,000), while the amount that goes towards the foreclosure of the original loan will be greater, about ₹2,83,490. That’s a difference of almost ₹65,000 determined just by the loan tenure.

  1. EMI for the current car loan:

The EMI on the current car loan will help determine the split in top-up loan against the car. In simpler terms, this means that specifying the EMI of the current loan will show how much of the loan amount will go into the foreclosure of the current loan and how much you will get as cash in hand.

  1. Number of EMIs paid:

To be eligible for balance transfer car refinance or a top-up car loan, one needs to have paid a minimum of 12 EMIs on the existing car loan. The number of EMIs paid is a crucial factor that helps to determine the loan amount as it indicates how much of the original loan amount has been paid already.


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