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Everyone dreams of owning a comfortable home and a plush car someday. Unlike earlier, when a car was a luxury commodity, it is a bit of both luxury and necessity for a large section of the Indian masses. The convenience of owning a vehicle need not be explained, making it a utilitarian product in the present day and age. The average age in which today’s youth purchases a car has gone down. This is because of the rising income at disposal among youngsters, enabling them to own one at a comparatively younger age than their previous generations. Another reason that makes purchasing cars easier than before is the availability of car loans that are readily offered to individuals at a minimum age of 21 years, earning a certain monthly salary and has a good CIBIL score. Now let’s look at how your CIBIL score determines your car loan eligibility.
Here are some reasons why lenders check your CIBIL score:
Your CIBIL score says about your chances of securing a car loan:
Want to apply for a car loan? Here’s what you should know before you apply for one:
Having a high CIBIL score definitely has its share of advantages when you apply for a car loan. However, the question is – “What are your chances of securing a loan with a bad or zero CIBIL score?” While we have discussed what a bad CIBIL score means, let’s have a closer view of what is meant by a zero CIBIL score. You will have a zero CIBIL score when you don’t have a credit history – you have never applied for a loan before or have never owned a credit card or own a credit card that you have never transacted with.
What is the CIBIL score required to secure a car loan?
The minimum CIBIL score required for being eligible for a quick and streamlined car loan approval process is 750. Besides, lenders may also evaluate other parameters like monthly income, number of existing loans, income to debt liability ratio, etc. to assess car loan eligibility.
Can I get a car loan without a CIBIL score?
Yes, you can secure a car loan without a CIBIL score, though the approval process will be more time-consuming and hassled. Besides, the terms and conditions you will be offered may not be as favourable as offered to those with a high CIBIL score. For instance, your loan amount may be lower or interest rate may be higher or may have a lesser tenure. You stand a higher chance of securing a car loan with a low CIBIL score, as compared to other types of loans, as your car serves as collateral till you have repaid the entire car loan.
I have a low CIBIL score. Will my taking a guarantor improve my chances of getting a car loan?
Getting a guarantor is one of the options you can explore if you have a low CIBIL score. The guarantor may be anyone from your friends or family with a good CIBIL score. In such car loan applications, your guarantor’s CIBIL score will be evaluated during the car loan approval process.
Does paying only the minimum amount due against my credit card bill affect my CIBIL score?
Yes, not paying the entire outstanding amount due at one go adversely affects your CIBIL score. Make it a habit to pay off the entire dues every month within the due date rather than paying only the minimum outstanding amount. When the remaining balance is carried forward to the following month, banks levy a heavy interest rate on it.