In today's fast-paced world owning a car has become a top priority. However, you’re worried bad credit could put a dent in your automobile aspirations. Fret not, for there are ways and means of navigating around such obstacles.
While it is certainly true that people with good credit history and high CIBIL scores stand a better chance of landing a car loan, ones with a less than satisfactory credit past can still put their apprehensions about applying for a loan to rest, as long as they work towards getting their finances in order.
There have been numerous instances of people with low credit scores taking out car loans from unscrupulous lenders at exorbitant interest rates, which not only plunges them further into debt but negatively affects their credit scores in the long run. Therefore, it is always advisable to get your CIBIL scores up to an acceptable level before applying for a loan.
Most banks usually accept a CIBIL score of 750 for a car loan, so keeping the following things in mind can significantly raise the likelihood of eventually procuring the car you’ve always wanted. The journey may be long, but getting there in the end is what ultimately matters.
Look over your credit report thoroughly
The first thing you can do to get your act into gear is by obtaining your credit report and going through it with a fine-tooth comb. Check your CIBIL score and figure out ways and means of improving it by coming up with a concrete plan and sticking to it.
Clear out those debts
Paying off any outstanding loans and EMI’s can go a long way in ramping up your credit score.
Any delay in payments towards loans or credit cards, or for that matter even failing to make regular payments, can significantly lower your CIBIL score.
Identify and rectify errors
Weed out any errors you my come across in your credit report and work on getting them fixed at the earliest to increase your chances of obtaining a car loan. There could be discrepancies in the report that have dragged your score down to a lower figure than it really should be.
Take your time
Avoid applying everywhere all at once. An inquiry on your file is created every time your credit report is accessed by a lender. Too many inquiries within a short span of time can weaken your CIBIL score, so spread your loan applications over a substantial period of time.
Better score, better rates
Improving your CIBIL score can help you attract better interest rates, which can help you pay off your loan in a shorter period of time. Therefore it is advisable to raise your credit score as much as possible before applying for a car loan.
Show you are creditworthy
Carrying documents like your salary/pay slips, that verify you have stable employment, as well as any other proof clearly showing that you make regular payments towards utilities like water and electricity for example, can help you gain a slight edge when approaching a lender for a car loan. This shows that you can be a good credit risk despite a low CIBIL score.
Investigate, Explore, Enquire
Do your research. The last thing you need at this point is a shifty loan shark driving you into a deeper ditch than the one you’re trying to get out of. Ask around and get second opinions if you have to, but make sure you don’t end up like a deer in the headlights when negotiating a loan deal.
Read More on CIBIL
- Mistakes That can negatively impact your CIBIL Score
- Solutions for your CIBIL Credit Report Problems
- Good Mix of Credit Can Boost Your CIBIL Score
- Study Abroad the Smart Way
- Truth About Pre-Approved Credit Cards
- How to remove name from CIBIL Defaulter list?
- The right CIBIL score will never get your loan request rejected
- Can I get a loan with a credit score of 550?
- Applying for a Home Loan? Improve your Credit Score
- FAQs : CIBIL / Credit Score
|Satisfied about your CIBIL status. Now, apply for a Car Loan|