Traveling in a car is more comfortable and convenient than any other vehicle. Owning a car means stepping into the next phase of life. It's mostly considered a milestone for most commoners. Right from commuting to the office on weekdays to going on long road trips on weekends, with a car loan you can purchase a car of your choice to meet your traveling needs. 

Buying a car through a car loan is the easiest way today since it arranges the upfront money you need for it and then divides it into easy installments. However, with increasing interest rates, the loan eligibility criteria have become tougher than it was before. Interest on a car loan varies from 6.75% to 9% pa. The factors that decide the interest on a car loan include your credit score, income, loan tenure, car category/model, down payment, etc.

This article provides input on how to improve your car loan eligibility and the best way to meet your loan eligibility criteria. 

All about Car Loan Eligibility Criteria

• The following requirements are must from the customer to meet the car loan eligibility criteria. Here it goes:

1. Age: Any individual aged between 21 to 65 years. He/she must not be more than 65 years of age at the time of loan maturity.
2. Income: In the case of a salaried individual, his/her (and a co-applicants) minimum net annual income must be Rs.3 lakh or above. A self-employed applicant's net annual income must be a minimum of Rs.4 lakh.
3. Work Experience: The applicant must have a minimum of 2 years of work experience in his/her field.
4. Credit Score: High credit score of 750 or above helps you get a low-interest rate car loan, as the credit score represents the applicant's capability.

• Prior to loan application, it's advised to check your loan eligibility. Multiple loan rejections will definitely have a negative effect on your credit score. 
• Banks and NBFCs will hesitate to lend car loans to applicants with bad credit reports. After picking a reputable lender, visit the official website of the bank or NBFC to check your car loan eligibility online.
• The digital car loan eligibility calculator is easy and simple to use. All you have to do is enter the make and model of the car, your age, income, and occupation. Click on the 'calculate' button and get an instant result. 

Tips to Improve Car Loan Eligibility

Choose Pre-approved car loans:

• Digital Lenders compete with each other to provide better services to customers in the form of minimal paperwork, instant loan approval, and loan disbursal in an effort to attract and retain them. Digital platforms like Kuwy uses advanced technology to give the best loans from finest lenders in the market.

Enhance the Loan term/tenure:

• Selecting a longer term is the most common method to increase loan eligibility. Since the higher term results in lower monthly payments on the same interest rate and principal loan amount. Lower EMIs enhance payment ability and loan eligibility.

Maintain a low debt-to-income ratio:

• A low debt-to-income ratio is one wherein the loan EMI payments must not exceed more than 50% of your income. The debt-to-income ratio is used to analyze an applicant’s loan repayment capacity. 

Improve your credit score:

• Bad credit history and other outstanding loans might affect your car loan eligibility. However, you can improve your credit score by paying your credit bills on time and minimizing debts.

Club the income:

• The eligibility for a car loan can be increased by clubbing the incomes of family members like spouses, mothers, fathers, or sons to apply for a bigger amount of loan.
• For instance, if your individual loan eligibility is around Rs. 10 lakh and your requirements are Rs. 20 lakh, show the combined income of two or more individuals in your family. 

Be strict on the loan agreement:

• Sometimes car loans may look very impressive when you apply, but later on, you may notice yourself stuck in the wrong loan product.
• If you want to avoid such a scenario, carefully read the fine print of the loan agreement. 
• How often will the lender revise the interest rate? What are the charges applicable to your loan? Read all the essential details carefully so that you’re not caught surprised later. 

Conclusion

Know complete details of your loan before entering into the loan process. Trust sources and companies like Kuwy can provide better assistance. So, we recommend you download the Kuwy app! 

Happy Learning!!