The minimum CIBIL score needed to get a Car Loan is an important factor for lenders when they review your application. This score is a reflection of your creditworthiness and determines not only if you qualify for a loan, but also its terms and conditions. A solid understanding of the minimum CIBIL score required for a Car Loan, and how it influences the approval process, is essential for any prospective car buyer. It's the key to unlocking the door to your dream vehicle.
What is credit score and how does it affect your ability to get a Car Loan?
A credit score, or CIBIL score, is a numerical expression based on the analysis of your credit history. It represents your creditworthiness. Ranging from 300 to 900, this score is a crucial metric for lenders to assess the risk of lending money or credit.
A higher score indicates a healthy credit history, suggesting that you are a low-risk borrower. This is particularly significant when applying for a Car Loan, as it influences the approval of your loan and its terms and conditions, including the interest rate offered to you.
Minimum CIBIL score required for a Car Loan
For most lenders, the minimum CIBIL score for a Car Loan is around 750. A score above this mark suggests to lenders that you have a history of responsible credit behaviour, including timely payments and maintaining a healthy mix of credit. Achieving this score increases your likelihood of not only securing a Car Loan but also obtaining favourable loan terms.
Why is the CIBIL score important for a Car Loan?
Your CIBIL score holds significant weight for several reasons when it comes to a Car Loan:
- Determines the interest rate: A high CIBIL score is more than just a number - it's a bargaining chip. It reflects a history of responsible credit management and timely repayments, which in turn, makes you a less risky prospect for lenders. Basically, the better your score, the lower the interest rate you might secure on your loan. This will help you save a considerable amount over the duration of your Car Loan.
- Governs the approval or rejection of the loan: A score that meets or exceeds the minimum CIBIL score required for a Car Loan suggests to lenders that you are likely to repay your loan regularly, leading to a higher chance of approval. Conversely, a lower score may signal to lenders that you pose a high risk, potentially leading to your loan application being declined.
- Helps determine the loan amount: Lenders often use your credit score to determine the maximum loan amount to offer. A higher CIBIL score indicates financial stability and reliability, which can result in lenders agreeing to a larger loan amount. Inversely, if your score is low, they might not be ok with large amounts.
Can I get a Car Loan with a low CIBIL score or no credit history?
Obtaining a Car Loan with a low CIBIL score or no credit history is challenging but not impossible.
While the minimum CIBIL score for a Car Loan is important, lenders also consider other aspects of your financial situation, such as income stability and existing debts.
If you have a lower than the minimum CIBIL score for a Car Loan, here are your options -
- Secure a co-applicant with a better credit score
- Opt for a higher down payment to lower the risk for the lender
- Look into loan products specifically designed for those with poor or no credit history
Also Read: How can you reduce your car loan EMI?
Such strategies can improve the likelihood of loan approval and pave the way towards acquiring a vehicle.
Embark on the journey to purchase your new vehicle with Axis Bank's New Car Loan. It offers competitive funding options from ₹1 lakh to 100% of the on-road price. Enjoy the suite of advantages that come with it, including attractive interest rates, a comfortable loan tenure, and the rewarding Axis EDGE reward points. Before you set your plans in motion, utilise the handy online Car Loan Calculator to get a clear view of your EMI and take a step closer to making your car ownership dream a reality.
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.
