How to increase your car loan eligibility?


    When you decide to purchase a car with the help of a loan, you first need to ensure whether you are eligible to get a loan or not. You may think that you will not face any complications as you have never violated any rules and regulations. But you may not even imagine what all aspects act as driving factors for car loan approval.
    The car loan eligibility includes certain factors, such as:
  1. Age The age of the loan applicant should be between 21 and 65 years. No individual under the age of 21 years can apply for a loan as this is a standard age when an applicant becomes capable enough to repay a loan. However, an applicant’s age should not exceed 65 years at the time of maturity.
  2. Income An applicant must have a standard regular income. Generally, banks and NBFCs demand Rs. 3 lakhs as minimum net annual income for a salaried individual and Rs. 4 lakhs for self-employed applicants. But this is not a fixed parameter, as it keeps on changing from one lender to another.
  3. Work experience The same goes for the work experience. An applicant can be a salaried employee or a self-employed individual, but he/she needs to have 2 years of minimum work experience in his/her field.
  4. Credit Score – A credit score sets the limit of your creditworthiness. Only if you have a higher credit score or CIBIL score that is above 750, you will get the car loan approval easily. The moment your credit score goes down, the chances will start reducing.
  5. Car type Another factor that plays a vital role in case of a car loan eligibility is the type of car you want to purchase. Is it a brand-new car or a used car? The type of loan will also differ as per the type of car.

On the basis of these 5 factors, your loan eligibility will be decided. Each financial institution has some set parameters, which you need to fulfil to get car loan approval.
    So, you first need to check the car loan eligibility. Check and verify multiple times to avoid any loan rejection. This is because multiple loan rejection will have a negative impact on your creditworthiness. Your credit score will go down. This will not only increase the risk of loan rejection again in future, but also may increase the car loan interest rate. You can also get an idea about car loan interest rates in India of all banks and NBFCs to know how much you have to pay as per your eligibility.
    Applicants always attempt to get lower car loan rates in India, but instead of availing a lower rate if we increase the rate of interest due to our own fault, then that will be a blunder. The interest rates in India usually starts from 6.99%, but it keeps on increasing on the basis of your eligibility fulfilment. Car loan eligibility does not always come up with a defined answer like loan application approval or rejection. It may even come as approval with a much higher rate of interest. After evaluating and matching the car loan eligibility with your profile, you should work on certain pointers, so that, you can reach or over-reach the eligibility.
    Ways to improve car loan eligibility:
1. Pre-approved loan
Lenders want to offer loans to applicants and better services along with car loan approval. You need to grab those opportunities. Many lenders offer pre-approved car loans with minimal paperwork, car loan online application procedure, instant car loan approval and disbursal. These are some effective tactics to attract and retain customers. Generally, banks offer pre-approved car loans to their existing customers. So, in whichever bank you have an existing account, you can get pre-approval for a car loan from there, to avoid any delay or rejection.

2. Low debt-to-income ratio
Make sure that the amount of loan you apply for does not exceed 50% of your income. The lower debt-to-income ratio, the chances of getting quick car loan approval will increase.
    3. High credit score : A higher credit score will definitely play a major factor to get easy car loan eligibility. If you have a low score, work on it constantly to reach up to 750+. You should maintain a well balance of secured and unsecured loans, pay credit card bill and EMIs on time, avoid being a defaulter of any other loan. These steps will help you to maintain a good score or improve it further.

    4. High down payment
    Higher down payment will automatically denote a lower loan principal and hence lower EMIs. This will easily give car loan approval as the lending amount will pretty low for the lenders.

    5. Co-applicant
    If you apply for a joint car loan that is with a co-signer or a co-applicant, then the chances of getting car loan approval will increase manifold. Moreover, if your co-applicant has a good credit score and higher income or your co-signer serves as a guarantor, you can easily qualify car loan eligibility and may avail lower car loan interest rate.