Owning a car in India is no longer limited to those who can make large upfront payments or pass complex credit checks. Thanks to flexible financing solutions, it’s now possible to drive home a new or used car while managing payments in installments. Whether you’re looking for your first car or upgrading, installment-based plans are helping thousands access vehicles with ease and clarity.
In this article, we’ll explain how these options work, who they are for, and what to keep in mind before signing up for any vehicle finance plan.
Understanding Installment-Based Car Ownership
Installment-based car ownership allows customers to acquire a car and pay over time instead of upfront. These options are designed to offer more flexibility and accessibility, especially for individuals who might not meet traditional credit criteria.
In India, these plans are often referred to as EMI (Equated Monthly Installments) or Buy Now, Pay Later (BNPL) options. They are available for both new and pre-owned cars and can be availed through banks, dealerships, or digital lending platforms.
Types of EMI Options Available
Different types of installment options cater to different buyer profiles. Here’s a breakdown:
- New Car EMI Plans: Offered by car manufacturers and financial institutions for salaried or self-employed buyers. These often come with tenure options ranging from 1 to 7 years.
- Used Car EMI Schemes: Suitable for those looking for certified pre-owned cars. These typically involve slightly higher interest rates than new car financing.
- Drive Now, Pay Later Programs: Some platforms offer a delayed payment plan where you start paying EMIs after a few months of purchase.
- No Credit History EMI: For customers without credit scores, certain platforms offer low-risk installment plans based on alternative data like income and mobile bill payments.
- BNPL Vehicle Plans: Emerging fintechs are now providing flexible BNPL options for specific car models with minimal documentation.
Where to Find These Options in India
You can access installment car finance through:
- Authorized Dealerships: Most car brands in India now offer in-house financing or partner with banks to provide EMI-based solutions.
- Banks and NBFCs: Traditional banks like SBI, HDFC, ICICI, and NBFCs like Bajaj Finserv offer structured car loans with fixed interest rates.
- Online Aggregators: Platforms such as CarDekho, Spinny, Cars24, and Droom offer used car financing options with digital KYC and eligibility checks.
- Subscription and Lease Platforms: Some services offer car leasing with options to convert the lease into ownership through monthly installments.
Who Can Benefit From Installment-Based Car Plans?
These car finance options are ideal for:
- Salaried professionals starting a new job or relocating
- Self-employed individuals who prefer to keep working capital intact
- Students and first-time buyers with limited credit history
- Families upgrading their car without disrupting savings
- Used car buyers seeking a second vehicle for daily commuting
The flexibility of choosing repayment tenure, combined with no large upfront cost, makes these solutions appealing across income brackets.
Key Features to Consider Before Applying
While these plans provide convenience, it’s important to understand:
- Down payment requirements: Even if termed “zero down,” some plans might require initial documentation fees or insurance charges.
- Processing time: EMI approvals typically take 24–72 hours depending on credit profile and lender.
- EMI structure: Ensure clarity on interest rates, tenure, and total payable amount.
- Insurance and maintenance: Some packages include periodic servicing and insurance in the EMI, others don’t.
- Early foreclosure terms: Check if there are penalties for paying off the balance early.
Reading the fine print and asking the right questions can protect you from unexpected charges.
Common Misconceptions About Car EMI Offers
Let’s clarify a few things:
- “No credit check” doesn’t mean no evaluation: Lenders may use alternative methods to assess risk, such as salary slips or utility bill records.
- “Drive now, pay later” is not interest-free: While payments may be deferred, interest usually accrues during the no-payment window.
- Used car EMI terms are different: Tenure and rates vary depending on the age and condition of the vehicle.
Transparency is key — always work with verified partners and request clear documentation of all terms.
Responsible Borrowing Tips
Here’s how to make your car purchase financially manageable:
- Choose an EMI that does not exceed 20–30% of your monthly income.
- Avoid taking a long tenure just to reduce the EMI — it increases total interest paid.
- Compare offers from multiple lenders or platforms before finalizing.
- Track payment schedules and set auto-reminders to avoid late fees.
- Keep proof of all transactions and contracts digitally stored.
Practicing disciplined borrowing helps maintain a good repayment history, useful for future loans or upgrades.
Conclusion
Whether you’re exploring a new car on EMI, a second-hand vehicle financed through installments, or a flexible BNPL offer, the Indian car market now offers inclusive solutions for diverse needs. By understanding how these programs work and being cautious about terms, you can get behind the wheel without compromising financial stability.
Buying a car is a significant step — and with the right installment option, it’s now more achievable than ever, regardless of your credit history or savings in hand.