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What Does A Zero Down Payment Car Loan Mean?


by Mahindra Finance


April 17, 2024


4 mins read

Dreaming of owning a car but worried about the hefty down payment? Well, worry no more! With zero down payment car loans, you can drive away with your dream car without breaking the bank. In this article, we'll explain what zero down payment car loans are, their features, car finance eligibility criteria, and why they might be the perfect option for you. So let's dive in!

Features of a car loan with zero down payment

The following are the features of a zero down payment car loan:

1. No down payment:

The bank funds the entire cost of the vehicle. However, keep in mind that additional expenses like accessories may not be covered by the loan.

2. Good credit score:

To avail of a zero down payment car finance, having a good credit score is crucial. Lenders consider your creditworthiness before approving the loan.

3. Processing fees apply:

While the down payment is waived, you will still have to pay processing fees to the bank when taking a zero down-payment car loan

Car finance eligibility criteria

To qualify for a zero down payment car loan, you need to meet certain eligibility criteria:

  1. Age: Typically 25 years or older.
  2.  Income: A minimum annual income of Rs. 2.5 lakhs. The total existing loan EMIs, along with the new car loan EMI should be less than half of your salary.
  3. Credit score: The higher your credit score, the more favourable the terms and car loan interest rate you can secure.
  4. Employment: Lenders prefer borrowers who have a stable income source and work experience of at least three years.
  5. Car value: The car's value plays a role in determining the car finance amount you can receive. Higher car values may result in less chance of receiving 100% financing.

Documents required

When applying for a zero down payment car loan, you will need to submit certain documents:

  • ID proofs
  • Address proofs
  • Income proofs 
  • Previous loan or vehicle ownership documents

Sample Calculation:

Let's understand how the car loan EMI calculation works using an example:

Loan Amount: Rs. 5 lakhs

Interest Rate: 8% per annum

Loan Tenure: 5 years

Using a car loan EMI calculator, we find that the monthly instalment for this loan would be approximately Rs. 10,466.


Zero down payment car loans are a great option for individuals who want to own a car but don't have enough funds for a down payment. By eliminating the need for an upfront payment, these loans make owning your dream car more accessible and affordable.

Before applying, ensure you meet the car finance eligibility criteria and have all necessary documents ready. Use online tools like car loan EMI calculators to estimate your monthly instalments and plan your car finances accordingly.

If you're considering a zero down payment car loan, Mahindra Finance offers competitive options that can help you achieve your dream of owning a car. Visit the Mahindra Finance website or contact them for more information and guidance.


Q: How can I calculate the EMI for a zero down payment car loan?

A: You can use a car loan EMI calculator available online. Just enter the loan amount, car loan interest rate, and tenure to get an estimate of your monthly instalment.

Q: Can I opt for a zero down payment car loan if I have a low credit score?

A: While having a good credit score increases your chances of approval, some lenders may consider borrowers with lower credit scores as well. However, keep in mind that the car loan interest rates might be higher in such cases.

Q: Are there any additional charges associated with zero down payment car loans?

A: Apart from the processing fees, there may be other charges like documentation fees or prepayment penalties. It's important to clarify these details with the lender before finalising the loan.

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