Power Your Drive: A Guide to Electric Vehicle Loans

An electric vehicle loan is a dedicated financing option that lets you purchase an EV without depleting your savings, making transportation more accessible and affordable. This guide explains how EV loans work, their eligibility criteria, and how to manage repayment so you can make an informed decision.

What are Electric Vehicle Loans?

An electric vehicle loan is a form of unsecured credit that finances your EV purchase. You repay the borrowed amount through equated monthly instalments (EMIs) over a pre-determined tenure, typically ranging from 24 to 84 months.

Because EVs are fuel-efficient and environment-friendly, many lenders, including non-banking financial companies (NBFCs), offer competitive interest rates and flexible repayment options to encourage sustainable future adoption.

Also Read: The Future of Electric Vehicles in India: Opportunities and Challenges

How do Electric Vehicle Loans Work?

Your EV loan works like a traditional car loan, but without the need for collateral, as approval is based on your creditworthiness and income. You also benefit from tax benefits under Section 80EEB, claiming up to ₹1.5 lakh deduction on interest for individual buyers, plus state subsidies that cut upfront costs. 

For example, a ₹10 lakh EV car loan at 9% over 36 months yields an EMI of approximately ₹31,833, with a total interest of around ₹1.1 lakh, offset by tax savings.

The key advantage is flexibility: you choose your repayment period based on your financial capacity. Most lenders also offer part payment options, allowing you to clear the outstanding principal early without penalties, which accelerates your journey to becoming debt-free.

Eligibility Criteria for Electric Vehicle Loans

The eligibility criteria for an electric vehicle loan may vary based on whether you are a salaried employee or a self-employed individual. Keep in mind that these are broad criteria and will be finally determined by your lender.

Eligibility for Salaried Employees

• Age: 21-60 
• Monthly income: ₹15,000+ (varies by lender)
• Employment: At least 1 year total experience, 3-6 months in current job.
• Credit score: 650+.

Eligibility for Self-Employed Professionals

• Age: 21-60 years.
• Business vintage: 2+ years.
• Annual income: Sufficient to cover EMIs (proof via latest income tax return, audited balance sheet).
• Credit score: 650+.

Both require KYC documents such as PAN, Aadhaar, address proof (electricity bill, telephone bill), income papers (latest salary slip, bank statement for 6-12 months), and vehicle documents such as the registration certificate.

Also Read: Type of Car Loans in India: Which is Better?

How to Find the Best Electric Vehicle Loan?

Here's how you can find the ideal electric vehicle loan and manage it effectively:

Compare interest rates and terms

Check interest rates from banks and NBFCs to ensure competitive EMIs. Review processing fees, valuation and RTO charges, and amortisation schedule charges to avoid hidden costs. Understand repayment flexibility, part payment options, and loan cancellation policies. 

Maintain a strong credit score

Pay all dues on time, clear prior debts, and avoid multiple loan applications. A credit score of 750+ improves approval odds and secures lower interest rates.

Know the eligibility criteria

Verify that you meet the credit criteria before applying. Ensure documents are complete and accurate - latest salary slip, bank statement, and latest income tax return must match lender requirements. Mismatches lead to rejection.

Compare loan tenure options 

Choose between shorter (36 months, higher EMI) and longer (96 months, lower EMI) repayment tenure based on your budget. Check if lenders offer fixed-rate loan facilities or flexible tenures up to 8 years (SBI, HDFC).

How to Manage Your Electric Vehicle Loan?

The electric vehicle purchased with the loan serves as the primary collateral for the loan. This makes it crucial to manage it well; here are some tips on the same:

• Calculate the loan amount you truly need and set aside a 10-20% down payment.
• Keep your EMI under 40-50% of your monthly income to avoid financial strain during repayment.
• Use surplus funds for part payments whenever possible to reduce principal, lower total interest, and help you pay off the loan sooner.
• Regularly check your amortisation schedule via mobile updates or customer service to track your loan progress.
• Keep a record of all transaction receipts and loan details for future reference.
• Consider refinancing or loan cancellation options if you find better interest rates during the loan term, but confirm any penalties upfront.

Also Read - Advantages of Electric Vehicles (EVs) in India

How to Apply for an Electric Vehicle Loan

Many lenders offer streamlined digital applications and quick approvals for EV loans. The loan application process is designed to support electric vehicle purchase through quick and organised funding:

• Fill out the online application form with basic personal and financial details
• Upload required documents such as KYC, income papers, and bank statements 
• Get the vehicle details verified by the lender
• Receive online transaction confirmation or loan approval after credit assessment
• Complete e-signature or agreement formalities
• Get the loan amount disbursed directly to the dealer or seller

To Conclude

Electric vehicle financing options offer an accessible, affordable way to transition to eco-friendly transportation without depleting your savings. By understanding how these loans work, you can make a choice that benefits the environment while easing the process of funding electric vehicles. However, if you are planning to buy a used EV with financial assistance, check out Poonawalla Fincorp's Used Car Loan to enable your dreams. 

FAQs

What documents are required for an electric car loan online application?

To apply for an EV car loan online, you will need documents such as income proof (latest salary slip, bank statement, or ITR), KYC documents (PAN, Aadhaar, and address proof), and vehicle documents (registration certificate).

Can I pay off my EV loan early?

Yes, many lenders offer part-payment options that let you pay off the outstanding principal early, which can help reduce total interest and shorten your loan tenure. Check for any penalties or charges before making part payments.

How can I track my EV loan progress?

You can track your green car loan progress by regularly checking your amortisation schedule via updates sent to your registered mobile number, or by contacting customer service for detailed insights into your repayment status. Ensure you keep your loan account number handy.