Cars have become a necessity these days. Despite the availability of cars across various price ranges, it might still be a difficult to get the necessary funds to procure a car at the right time for many income groups. That is when Car Loans come into play.
You might have to deal with a bad credit score standing in your way of getting Car Loan. However, this need not be the end of the road for you; a bad credit is just a bump in the road and you can navigate through it with just a few tips in mind.
Impact of bad credit on Car Loan approval
Understanding the impact of a low credit score is the first step to rebuilding. Lenders often view applicants with low credit scores as high-risk borrowers, which may lead to higher Car Loan interest rates or loan denial. However, there are strategies to improve your creditworthiness and increase your chances of loan approval. Here are a few:
Rebuilding credit
Rebuilding your credit score is like fixing a flat tyre — it requires time, effort, and consistency. Start by paying your bills on time, as timely payments contribute significantly to your credit score. Reducing outstanding debt and maintaining low credit card balances can positively impact your credit health. Regularly check your credit report for errors and dispute any inaccuracies you find. Over time, these actions can help enhance your credit score, making you a more appealing candidate for Car Loans.
Determining an affordable budget
Creating a budget is akin to having a roadmap for your finances. Evaluate your income, expenses, and financial obligations to determine how much you can comfortably pay monthly. Remember, car ownership costs aren’t just loan repayments; consider insurance, maintenance, fuel, and other related expenses too. By sticking to a budget, you avoid financial strain and ensure smoother repayment, ultimately benefiting your credit score.
Also Read: What is the best time to buy a used car
Exploring alternative lenders
Do not hesitate to explore alternative lenders, as they might be more accommodating of credit hiccups. Some lenders specialise in working with individuals with bad credit and may offer more favourable terms. Research various lenders, compare Car Loan interest rates, and read customer reviews to find a suitable option. Remember, securing a loan with reasonable terms can make your journey to car ownership financially sustainable.
Axis Bank Car Loans
Make your dream of owning a car a reality with Axis Bank New Car Loan. Axis Bank offers flexible, quick, and cost-effective car loans. Check your Car Loan eligibility on the website, whether you are salaried or self-employed. Priority, Wealth, Privee customers, and salary account holders with Axis Bank receive additional benefits.
Down payments and co-signers
A substantial down payment or a reliable co-signer can be your golden ticket to loan approval. A larger down payment reduces the loan amount, demonstrating to lenders your financial commitment and reducing their risk. Similarly, a co-signer with a good credit score can provide additional assurance to lenders, increasing your chances of approval and securing better loan terms.
Also Read: Can you get a car loan if you are self-employed?
Negotiation strategies
Negotiating loan terms can be vital to securing a favourable deal. Do not be afraid to discuss interest rates, loan duration and other aspects with your lender. Being informed about market rates and your creditworthiness can aid in these discussions.
Remember, securing favourable terms can make loan repayment more manageable and contribute to a positive credit history.
Balancing risk and benefits
It is crucial to weigh the risks and benefits of a Car Loan, especially with bad credit. Consider the loan’s impact on your financial stability and whether the terms are manageable. Initially, opting for a lower-priced, reliable vehicle can reduce borrowing needs and financial strain.
As you work on improving your credit score and paying down the loan, refinancing for better rates in the future could become a viable option.
Car Loan EMI
Before finalising your Car Loan, use the Axis Bank Car Loan EMI Calculator to determine your monthly instalments and ensure they align with your budget. This tool helps you plan your finances better and avoid surprises during repayment.
The gist…
While bad credit can pose challenges in securing a Car Loan, understanding its impact and adopting strategies such as rebuilding credit, exploring trustworthy lenders like Axis Bank, and leveraging negotiation skills can enhance your eligibility and secure favourable loan terms. Balancing risks and benefits and making informed decisions will lead to a smoother journey to car ownership.
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.
