Car loan: Your financing terms could be costly if you require a car loan but don’t have excellent credit. Credit scores are used by lenders to determine how likely it is that you will repay your loan; the lower your score, the greater the risk they assume. Lenders typically impose a higher interest rate in return for such a risk. In this article, we will tell you how you can get a car loan if you have a bad credit score.
How to get a car loan if you have a bad credit score?
A sizeable portion of Indians either have no credit history or a low credit score. Nevertheless, lenders have developed new ways to offer loans to those with poor credit as a result of the financial sector’s technological advancements.
Check your car loan eligibility
Obtaining a car loan with a poor credit score can be more expensive than for someone with excellent credit. Get a free credit report from one of India’s credit agencies. Prior to applying for a loan, try to raise your credit score if it is low. Paying off current debts, unpaid balances, and on-time payments are a few strategies to raise your credit score.
Volunteer to make a higher down payment
An automobile loan’s overall cost is reduced when you put down a substantial amount of money. Lower processing and interest costs are a result of a larger down payment. A tiny portion of the total loan amount that needs to be processed by the bank is used as the processing charge for auto loans. When the borrower receives the loan, it must be paid in full upfront.
Apply for a pre-approved loan from your bank
Certain banks grant pre-approved loans to their current clients based only on their KYC documentation. In this situation, your chances of getting a car loan from your bank are increased even if you have a low credit score. Discuss terms with your bank’s relationship manager.
Loan against car
There are other options for new or used car loans, such as loans against FD and loans against cars. To get money to buy a newer model of car, you can use your FD or current car as collateral.
If not directly from banks, then at least through loan aggregators, those with poor or low credit scores can apply for car loans. However, as loan aggregators will almost certainly demand a higher interest rate, this step could prove expensive. Therefore, it makes sense to raise your credit score before submitting an application for a car loan. Choose a vehicle loan with a lower interest rate to buy the car of your dreams.
Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK, INSTAGRAM, and TWITTER