A car is not a luxury anymore rather it has become a necessity for the daily commute. Life without a personal vehicle is quite frustrating as metro or a bus can’t take you everywhere. Also, hiring a cab has become quite expensive as cab companies keep hiking the fares. A Bike is also an alternative to public transport, but it isn’t comfortable. Also, a bike is not suitable for a large family. In contrast to this, a car is much more comfortable and suits even a big family.
But buying a car requires hefty paycheck which obviously everybody doesn’t have. Not everybody has a high paying job! For the ones that have an average salary, buying a car by paying full cash is a dream that can take many years to complete. This fact is enough to break hearts for those who want to buy a car but does not have enough cash. But the good news is that you can take used car loan that would help you to fulfill your dream of owning a car. You can get a car loan not only for a new car but also for a used car loan. There are many banks and NBFC’s units that are willing to give an individual a car loan if they fulfill the eligibility criteria of a car loan.
If you are planning to buy a used car you can apply for a car loan.
No more one has to stand in a queue in banks to get loan approvals as one can get check car loan eligibility online. It is worth to remember that you should check eligibility conditions before you apply for a car loan. Before you apply for a car loan, you must check for some eligibility criteria that NBFC would consider before giving you a loan.
Some of the eligibility conditions for the car loan are
- The individual must be between 21 years at the time of loan approval to 60 years at the end of the loan tenure.
- In case of employment, an individual must be employed for at least 1 years.
- The individual must have a good credit score. A credit score of 750 and above is considered a good score.
A credit score forms an important part of car loan eligibility. But what is a credit score?
The credit score of a person is defined as the loan repayment ability. A credit score is given in the range of 0 to 900. A high credit score is achieved if an individual pays EMI’s on time and does not default on loan repayment.
A high credit score helps to get a low rate of interest on a car loan. The used car loan interest rate has a lot of benefits as you can save a lot of money.
However, before you apply for a car loan, you should compare the rate of interest offered by different lenders in India. Droom Credit offers an interest rate of 9.60% on used cars which is quite cheap when compared to other banks and NBFC’s.
The rate of interest plays a big factor in determining the EMI of your car loan. EMI or equated monthly installments is the general mode of repayment of loans that lasts until the end of the loan tenure. The EMI’s are fixed installments that the borrower needs to pay to the lender as per the term and conditions of the loan.
The loan tenure and the EMI are related inversely. Generally, the longer the tenure is, the lower the EMI. On the other hand, short loan tenure results in a high EMI. The maximum loan tenure for a car loan offered in India is usually 7 years.
If you are looking for a cheap used car loan, then you can apply for car loan online. You can visit the Droom Credit or dial the toll-free number for further inquiry.
Droom
Droom is an automobile e-commerce platform offering a 21st-century automotive buying experience online with its four value pillars including trust, selection, low price, and convenience second to none. It offers 250k+ vehicles online in 1,100 cities — both used and new. Droom deals in buying and selling cars, 2-wheelers, and other vehicles too. It is an AI and data science-driven platform designed with the best ecosystem tools. Here, we have a team of auto-experts and auto enthusiasts who are dedicated to covering every sphere of the auto industry by simplifying the procedure of buying and selling with Unified Droom Experience. To know more, click here.
FAQs
Proof of address: Bank statement, utility bill, lease agreement or mortgage statement. Proof of income: Pay stubs, bank statements or tax returns. Vehicle information: Age, make, model, trim, current mileage and vehicle identification number (VIN).
How do banks verify income for auto loans? ›
If you're applying at a financial institution where your income is regularly deposited, they will most likely have what they need, as well. But it's best to assume that you'll need to back up what you listed for income on your application. Very simply, a tax return or paystub will do the trick.
What would disqualify you from a car loan? ›
Borrowers may be denied for vehicle financing due to errors in the application, bad or limited credit or a large amount of debt. The first step following auto loan rejection is to contact the lender to request the specific reasons for the denial.
What credit score do they check when getting a used car? ›
FICO® credit scores are the auto industry standard for determining a potential buyer's creditworthiness.
What three main things determine a car loan? ›
Here are the 3 major factors that affect both your monthly payment and the total amount you'll pay on your loan:
- The loan amount. It can be significantly less than the value of the car, depending on whether you have a trade-in vehicle and/or making a down payment.
- The annual percentage rate. ...
- The loan term.
Most loan applications only take a few minutes to complete, and funding can be delivered electronically to your bank account within one to three business days. But the exact timeline depends on the type of lender you work with and its underwriting process.
How do online lenders verify income? ›
Lenders require income verification because they don't want to approve a loan you can't afford. Modern technology allows lenders to verify income from many employers electronically. If you receive your income in cash, you should be able to prove it with bank statements or tax returns.
Do banks check your income when applying for a loan? ›
Income is always verified and will require significant documentation. Minimizing debt: Lenders want to see a low debt-to-income ratio (DTI). Most likely, your debts will be checked in a credit pull. If you are asked to provide this information, report it accurately.
How do loan providers verify income? ›
Mortgage lenders verify employment by contacting employers directly and requesting income information and related documentation. Most lenders only require verbal confirmation, but some will seek email or fax verification. Lenders can verify self-employment income by obtaining tax return transcripts from the IRS.
Can you be denied a car loan with a cosigner? ›
You can still be denied, but only in rare circ*mstances, most of which will likely not apply to a first-time borrower. A borrower with a poor credit history or negative financial situations, such as bankruptcies or repossessions, will have a harder time getting approved for a loan—even with a good co-signer.
If one or more late payments or collections show up on a credit report after you've already been approved, your credit score could drop below the minimum required for your loan, and your loan could be denied.
Are car loans hard credit checks? ›
Hard credit inquiries occur when applying for items such as mortgages, auto loans, or new credit cards. Hard pulls typically result in just a small ding to your credit score, but multiple hard credit checks within a short time frame can potentially add up.
Can I get a car loan with a 500 credit score? ›
Yes, it is possible to get a car loan with a credit score of 500, but it can be infinitely more challenging to find a lender willing to approve the loan. A credit score of 500 is considered poor credit, and lenders will likely see you as a higher risk borrower.
What is the lowest credit score to buy a car? ›
Most used auto loans go to borrowers with minimum credit scores of at least 675. For new auto loans, most borrowers have scores of around 730. The minimum credit score needed for a new car may be around 600, but those with excellent credit often get lower rates and lower monthly payments.
Can you get a car with a 400 credit score? ›
There is no universal minimum credit score needed for a car loan, but the terms and approval odds of a loan are impacted by your credit scores. Lower credit often means fewer available offers and generally higher interest rates — which why it's important to shop around for the best terms on potential auto loans.
What matters most when applying for a car loan? ›
Sufficient income, credit and a history of paying debts on time are among the top criteria lenders seek in an applicant. The documents you need for an auto loan verify that you can afford to pay back what you borrow.
Is a car loan a hard check? ›
Hard credit inquiries occur when applying for items such as mortgages, auto loans, or new credit cards. Hard pulls typically result in just a small ding to your credit score, but multiple hard credit checks within a short time frame can potentially add up.
How to avoid hard inquiries when buying a car? ›
What you can do to avoid too many hard inquiries
- Check if you meet the loan rate requirements to see if you'll pre-approve or are pre-qualified.
- Get your free credit report in advance.
- Apply for auto loans within a 2 week period.
As such, it's not something you should expect to affect your credit score much—it certainly won't wreck it. While yes, getting pre-approved for an auto loan does involve a “hard credit inquiry”, the impact on your credit score is minor.
