Can You Avail a Used Car Loan If You Have a Low Credit Score?

Let’s face it! Everybody wants to grow in life, and owning a car takes them one-step closer to turning that dream into reality. So, if you wish to own a four-wheeler by taking a loan, make sure you have a decent credit score.

After improving your credit rating, you must scout the market for affordable loan offerings. You must also simultaneously check your used car loan eligibility with a particular lender to improve your chances of approval.

For a lender to accept your loan application, the standard eligibility criteria you need include the following.

• Age of the applicant can be anywhere between 21 and 65 years.
• The applicant must show proof of annual income that is above Rs. 2 lakhs.
• If the applicant is self-employed, they should show evidence of at least 1 year of experience in their field of work.
• If the applicant is an employee, at least 2 years of work experience must be shown as proof.

As a thumb rule, lenders usually approve loan applications with a credit rating greater than or equal to 750. But, a lower CIBIL score does not mean you can’t apply for used car finance. It is worth noting that a significant proportion of the Indian population has no credit history or low scores.

Additional Read: CIBIL Score for Vehicle Loans

With the introduction of new practices in the finance industry, lenders have begun to support individuals with lower credit ratings.

Top tips to achieve financial assistance with a low credit rating

• Do not register for multiple debts in a short duration as this might give rise to unwanted credit obligations. Before applying for an auto loan, clear up any credit history you have as lenders check for red flags in your loan repayment patterns.  

• Evaluate the variety of options you have in the market and choose one that offers the lowest used car loan interest rates. These interest rates play a crucial role in deciding the total cost of your loan and monthly payments. You can also check the size of monthly EMIs to be paid through an online used car loan EMI calculator.  

• If possible, it is advisable to make a considerably high down payment on your used car. In this case, the total value of the loan reduces. Consequently, the interest rates and processing fees also fall.

Additional Read: How to Improve Your Chances of Getting a Used Car Loan?

Summing up

Are you looking for used vehicle finance? If so, all you need to do is find convenient lenders like Tata capital who offer used car loans at flexible tenures and competitive interests.

Get in touch with us today to find out more about our used auto loan plans. If you wish to zero-in on the figures, visit our website to use our used car loan calculator.