Auto Loans
An auto loan is secured by the vehicle itself, recorded as a “hypothecation” on the Registration Certificate — giving the lender a claim on the vehicle until full repayment, and requiring formal removal (via Form 35 and the lender’s NOC) once the loan closes. This guide covers LTV differences between new and used cars (and the correspondingly shorter tenures for used-car loans), and makes a key point often missed: most auto loans are fixed-rate, so the 2026 RBI (Pre-payment Charges on Loans) Directions — which apply to floating-rate loans — generally don’t protect auto loan borrowers from prepayment charges, unlike home loans and LAP. On tax: personal-use auto loan interest is never deductible, business-use vehicles can claim interest and depreciation under PGBP, and Section 80EEB’s EV interest deduction applied only to loans sanctioned by 31st March 2023 — it does not apply to new EV loans today. We also cover mandatory comprehensive insurance, bundled-insurance trade-offs, and car refinance as a lower-LTV alternative to top-up loans.