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How To Improve Your Chances Of Getting Approved For A Car Loan?

mahindra-finance-author

by Mahindra Finance

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May 13, 2024

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5 mins read

Introduction

Dreaming of purchasing your own car? Excited about the freedom and convenience it will bring to your life? But wait, before you start picturing yourself behind the wheel, there's an important step you need to take - getting approved for a car loan. Whether you're buying a new or used car, obtaining a loan is often the most feasible option for many individuals in India. 

To help you navigate through this process and improve your chances of getting approved for a car loan, we've put together some valuable tips and strategies. From understanding the importance of your credit score to calculating how much you can afford, we'll cover all the essential aspects that lenders consider when evaluating your car loan application. 

Here are six tips on how to take loan on car and improve your chances of getting a car loan approved:

1. Review Your Credit Score

When it comes to applying for any kind of loan, including a car loan, your credit score plays a vital role in determining whether or not your application gets approved. The higher your credit score, the better your chances of getting approved for a car loan. 

Banks and Non-Banking Financial Companies (NBFCs) use credit scores provided by the Credit Information Bureau India Limited (CIBIL) to assess an individual's creditworthiness. It is essential to ensure that you have a good credit score before submitting your car loan application.

2. Have a Stable Source of Income

In addition to reviewing your credit score, lenders also evaluate your sources of income. Having a stable source of income assures lenders that you have the financial capacity to repay the loan. 

This significantly improves your chances of getting approved for a car loan. A higher income, coupled with a stable career, demonstrates your ability to make timely Equated Monthly Installments (EMIs).

3. Borrow What You Can Afford

It's tempting to go for a high-priced car or borrow more than you can afford. However, borrowing beyond your means can reduce your chances of getting approved for a car loan. It is crucial to assess your financial situation and determine how much you can comfortably afford to repay each month.

To calculate this, utilise a car loan EMI calculator available on lenders' websites. Simply enter details such as the principal amount, loan tenure, and car loan interest rate to identify the EMI amount that fits within your budget.

4. Maintain Good Relations With Your Lender

Building and maintaining good relations with your lender can be advantageous when applying for a car loan. Not only will it improve the overall customer experience, but it may also increase your car loan approval chances and grant you access to a competitive car loan interest rate. 

By being a loyal customer, you might enjoy benefits such as extended car loan tenure, flexible repayment options, minimal documentation requirements, and lenient eligibility criteria.

5. Apply With a Co-Applicant

If you want to maximise your chances of getting approved for a car loan, consider applying with a co-applicant. Adding a co-applicant allows their income to be considered alongside yours, increasing your creditworthiness in the eyes of lenders. 

This strategy can not only boost your car loan approval chances but also help you secure a better car loan interest rate on your car loan.

6. Make Timely Repayments

Lenders evaluate whether you have any existing debt and whether or not you make timely repayments towards it. A good repayment history significantly enhances your chances of getting approved for a new or used car loan. 

Therefore, it is crucial to ensure that you make all your repayments on time, including existing loans and credit card bills. This demonstrates your financial responsibility and improves your overall creditworthiness.

Conclusion

Improving your chances of getting approved for a car loan requires careful planning and preparation. By reviewing your credit score, having a stable source of income, borrowing within your means, maintaining good relations with your lender, applying with a co-applicant, and making timely repayments, you can significantly enhance your odds of securing a car loan. When it comes to securing a car loan, Mahindra Finance offers attractive options tailored to meet the diverse needs of Indian customers. With their customer-centric approach and easy car loan application process, Mahindra Finance ensures a hassle-free experience when obtaining a car loan.

FAQs

1) What is the importance of having a good credit score in getting approved for a car loan?

Your credit score plays a crucial role in determining whether or not your car loan application gets approved. A higher credit score increases your chances of approval as it reflects your creditworthiness to lenders.

2) How can I calculate my Equated Monthly Installments (EMIs) using a car loan EMI calculator?

To calculate your EMIs using a car loan EMI calculator, simply enter details such as the principal amount, loan tenure, and car loan interest rate. The calculator will provide you with the monthly installment amount based on these inputs. This is crucial knowledge when considering how to take loan on car.

3) Can applying for a car loan with a co-applicant improve my chances of approval?

Yes, applying for a car loan with a co-applicant can significantly improve your chances of approval. Adding their income to yours enhances your creditworthiness and may help you secure a better interest rate.

4) What happens if I miss my car loan repayments?

Missing car loan repayments can negatively impact your credit score and overall creditworthiness. It is important to make your repayments on time to maintain a good repayment history and increase your chances of future loan approvals.

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