today, anyone can apply for a car loan online in a few simple steps. if you meet the car loan eligibility criteria set by the lender, you can get the loan disbursed to your bank account instantly. the car loan eligibility criteria will vary from lender to lender but many of the lenders look for these essential points before giving car loan approval:
car loan eligibility criteria
the above-mentioned points are general eligibility guidelines used by most lenders. apart from this, the following are the important factors that affect your car loan eligibility criteria:
factors affecting your car loan eligibility
low credit scores can be a big hindrance in getting car loan approvals. almost all lenders check your credit score in order to assess your creditworthiness and repayment history of previous or existing debts. if you have a credit score of 750 or above, there are high chances that the lender will approve your loan application easily. you can check your credit score and report on CRED instantly, find the link below
check your credit score for free on CRED
type of car
your car loan eligibility also depends on the type and model of the car that you want to buy. each car model has a particular resale value as per its features and specifications. the value of a car depreciates with time, hence, the lenders always take the resale value into consideration in order to determine the eligibility of the car loan you have applied for. if the resale value of the car that you want to buy is high, then your car loan eligibility will also be high and vice-versa.
as per the eligibility criteria set by the banks, if a salaried individual is applying for a car loan, he/she should have a minimum of 2 to 3 years of overall work experience and should be employed with the current employer for a minimum of 1 year. in the case of self-employed individuals, the applicant should have been in the same business for a minimum of 2 to 3 years.
income of applicant
the lenders also check your annual and monthly income and expenditure ratio to check whether you would be able to repay the car loan EMI on time or not. if you have a higher income, the lender will approve your car loan easily, however, if your income is slightly on the lower side, then it might be difficult for you to get a car loan approval. the lender may give you a lower loan amount or ask you to make a higher down payment to the car dealer.
the reputation of your employer
the organization that you work for can also help you in improving your car loan eligibility. for example, if you are working with an organization that comes under a fortune 100 company or any other company that is well-reputed in the market, then your loan eligibility will improve. considering the reputation of your employer, the lender may decide to give you a higher loan amount to finance the purchase of your car. if the organization that you work for does not fit the above criteria, you may have to show a high-income certificate to the lender in order to get a higher loan amount approval.
relationship with your lender
most of the banks give special preference to their existing customers. so, if you have a good relationship with your existing bank, then you should apply for a loan there first and try to negotiate with them to get a higher loan amount approved at a lower interest rate.
taking a car loan is a huge financial decision, hence, you should make sure that your car loan EMI rightly fits into your monthly expenditure budget. don't take a loan that you could not repay on time. it's better to take the help of a car loan calculator to estimate your car loan EMI before you apply for a loan with a lender. you can use the CRED car loan calculator to estimate your eligibility, car loan EMI, and how much interest you would pay in a set tenure. the CRED car loan calculator is free and anyone can use it online from anywhere. you just have to enter three variables - principal amount, interest rate, and the tenure of the loan to get estimated EMI, total interest, and overall repayment amount.
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