Applying for an Auto Loan to buy your dream car becomes better when you do it with a co-applicant. When you apply for a Car Loan with someone else — say a family member — it makes the whole process easier and comes with better perks. This way, you both can get better deals, like lower interest rates, and might help improve your credit scores. Having a co-applicant for car means you are more likely to be approved for the loan. It is like teaming up to buy your dream car, making the journey smoother from start to finish.
Basic requirements for co-applicant in a Car Loan
If you are thinking about getting a Car Loan with a co-applicant, there are a few key things both of you need to have:
- Proof of income: You both need to show paperwork that proves you have steady money coming in.
- Credit history: A good credit score is important because it shows you are likely to pay back the loan without any backlogs.
- Stable job: Having a job that is steady and reliable is crucial. It assures the lender that you can make the loan payments without any hassles.
- Debt-to-income ratio: This measures how much debt you have compared to your income. A lower ratio means you are not too deep in debt and can handle taking up loan repayments.
Besides these, it is also helpful if you both live at the same address or are related. This isn't always a must, but it can make things much smoother. Being clear about who will make the payments and how you will handle any potential financial bumps down the road can prevent issues later.
Benefits of having a co-applicant for Auto Loan
Incorporating a co-applicant in your car financing journey can unfold several advantages, that are important in making your loan experience smoother and fruitful.
- Helps to get a low interest rate
With the backing of a co-applicant, particularly one with a strong credit history, you stand a better chance of securing a lower interest rate. Lenders perceive a lower risk when more than one individual is responsible for repaying the loan, leading to more attractive interest rates.
- Builds a good credit record
For co-applicants aiming to enhance their credit scores, participating in an Auto Loan can be a strategic move. Timely repayments contribute positively to both parties' credit histories, setting a solid foundation for future financial endeavours.
- Acts as a motivator
Having a co-applicant can serve as a mutual motivation to maintain financial discipline. The shared responsibility ensures that both parties are committed to making timely payments, thereby avoiding any negative impacts on their credit scores.
- Qualify for a better interest rate and higher loan amount
The inclusion of a co-applicant in Car Loan often results in eligibility for higher loan amounts and more competitive interest rates. This is particularly beneficial when aiming to purchase a higher-priced vehicle.
- Helping a friend or loved one repair their bad credit
A co-applicant for Auto Loan can be a golden opportunity for individuals looking to rebuild their credit scores. By ensuring the loan is managed responsibly, both the primary borrower and co-applicant can see improvements in their credit records.
- Assist an aging parent
In situations where an ageing parent requires a vehicle but faces challenges securing a loan independently, stepping in as a co-applicant can be a thoughtful and practical gesture.
Also Read: Finding your way to a Car Loan with low CIBIL score
Conclusion
Getting a Car Loan with another person not only makes it easier to get your dream car but also offers many benefits that improve your money management and loan terms. You can enjoy lower interest rates and help fix credit scores, among other perks. With options like Axis Bank's New Car Loan, you can borrow from ₹1 lakh up to 100% on-road funding, enjoy lower interest rates, and earn reward points. Plus, their special schemes for electric vehicles and an easy EMI calculator make the journey as smooth as the drive in your new car.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
