Buying a new car can is a dream come for many. But it often goes hand-in-hand with the process of securing a Car Loan. Different lenders have different eligibility criteria and have a specific process to apply for the loan. If you want to improve your chances of getting a Car Loan, there are a few methods to enhance your eligibility.
Ways to improve your chances of getting a Car Loan
1. Monitor and improve your credit score
Lenders always check your credit score while evaluating your Car Loan application. A high score indicates that you are financially responsible, which increases your chances of securing favourable loan terms. You can improve it by -
- Checking your credit report from a major credit bureau to look for discrepancies and dispute them, if necessary.
- Paying your bills on time and clearing off your outstanding debts like Credit Card bills or existing loans.
2. Stabilise your income and employment
A stable job and income signals to lenders that you can repay your loan EMIs timely. Most lenders have criteria related to your income. If you are applying for an Axis Bank Car Loan, you will need to have a minimum net salary of ₹2,40,000/- per annum. It comes with a tenure of up to 7 years and provides 100% on-roading funding of your car. Axis Bank also offers special discounted rates if you are purchasing an electric vehicle.
3. Reduce your debt-to-income ratio
Debt-to-income ratio is the percentage of your monthly income you spend to pay your debts. A lower ratio shows that you have income to accommodate new debt. It is recommended that you aim for a DTI ratio below 35% to improve your chances of getting a Car Loan. You can focus on reducing your existing debts to maintain a healthy DTI ratio.
4. Save for a large down payment
While a lot of lenders offer loans without any down payment, a substantial amount as down payment can significantly improve your chances of securing a Car Loan as it shows your financial ability and even reduces the amount you need to borrow.
5. Choose the right lender
It's important you look out for the right lender that tends to your requirements and offers you the best deal. Take your time to compare different Car Loan interest rates and terms and choose one that fits your financial situation the best.
6. Gather all necessary documentation
Keeping the necessary documentation ready can make it easier for you to get approval for a Car Loan. Documentation includes KYC documents, income proofs, bank statements, and additional documents, if any.
7. Choose the right terms
Make informed decisions about choosing the right tenure as your EMI will depend on it. You can either choose a longer tenure with a lower EMI or a shorter tenure with a higher EMI. If you don't fit into your lender's eligibility criteria, you may also choose to apply with a trusted co-applicant.
Also Read: How to get pre-approved for a Car Loan?
Conclusion
Improve your chances of getting a Car Loan with financial preparedness, strategic planning and thorough research. Everything can be worked out if you gradually take small steps to secure the Car Loan you need.
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.
