If you want to increase your chances of loan approval, knowing about its eligibility becomes important. Remember, the eligibility or qualification criteria for a car loan differs from one lender to the other according to the borrower’s credit profile. For your easy understanding, refer to this guide and make the right move while selecting a car loan.
Basic eligibility criteria
To be eligible for a car loan, you need to fall within the below-mentioned criteria
Factors that impact your car loan eligibility
Your credit history: Banks run a credit score check to know your repayment behavior for your previous or existing debts. If you have a credit score of 750 or above, it will show that you have managed your finances responsibly, and hence, the banks will be most likely to approve your loan application easily.
Type of Car: The type of car that you want to buy through a car loan will determine your car loan eligibility. Each car model will have a resale value as per the features and specifications of the car. Hence, if the resale value of the car that you want is high, then your car loan eligibility will also be high. Since a car is an asset whose value depreciates with time, the resale value is taken into consideration to determine eligibility.
Applicant’s employment status and longevity of business: If a salaried employee is applying for a car loan, then they must have a minimum working experience of 1 year at the present company and 2 to 3 years of total work experience. If the applicant is a self-employed person, they should have been in the same business for a period of at least 2 to 3 years.
Applicant’s income: While availing an auto loan, your lender will check your income level to assess whether you can pay the EMIs on time or not. If you have a higher income, the lender will believe that you can repay easily without any difficulty. However, if your income is low, then your lender may be doubtful if you can pay every car loan EMI on time.
The credibility of employer: Employees working with reputed companies have higher chances to get favorable deal on car loans. This is because of your employer’s proven credibility which gives assurance to the lenders of your repayment capacity.
Relationship with your bank: If you are applying for a loan with the bank with whom you have an account, then there are high chances of easy loan approval along with a low rate of interest. This is possible only if you have maintained a steady relationship with your bank.
How a car loan eligibility calculator can help you?
With the help of a car loan eligibility calculator, one can easily calculate his/her eligibility. To use this calculator, you need to enter details such as your contact number, residence stability, type of employment, model, and ex-showroom price of the car, etc. Upon entering such details, the tool will check if you are eligible for a car loan. The information you are asked to fill will vary from one bank to another.
Hence, it is recommended that you check the eligibility for specific lenders before you apply for a car loan using a car loan eligibility calculator.