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Want To Apply For Car Loan? Here Are 5 Ways To Increase The Eligibility
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"A car loan is one of the most popular loans that lenders give out. It is very easy to get a car loan to buy the car of your choice. However, each lender has their own eligibility criteria to give out a car loan. Before applying for a car loan, it is best to check out the lender’s eligibility criteria and select such a loan that will fulfil all your requirements.
Some of the common car loan eligibility criteria that a lender looks at for every car loan application are:
• Age of the loan applicant
• Monthly income
• Existing loans or EMI obligations
• Credit score
• Minimum tenure of employment/self-employment
• Minimum period of stay in a particular city
Even if a person meets the minimum age or the minimum income requirements, a loan may get rejected or a lower amount may be sanctioned. Here are 5 ways to increase eligibility of a car loan.
1. Reduce existing debt:
Most lenders consider the existing debt that the loan applicant has to service before approving a loan application. One of the ways to strengthen your loan application is to reduce your debt especially all types of unsecured debt. Unsecured debt such as personal loans or credit card debt are a big red flag for lenders. Reducing or paying off this debt will give additional comfort to the lender.
2. Improve credit score:
A credit score is an indication of the person’s repayment history and capability. A credit score above 700 is considered to be good by lenders. Repaying debt, not making too many loan applications will help to improve your credit score. The car loan interest rate depends on the credit score.
3. Joint loan application:
Jointly applying for the loan with a co-applicant who has higher income or a better credit score can improve your chances of getting a car loan.
4. Consider pre-approved loans:
Lenders may pre-approve loans for customers that have a long banking relationship with them. By opting for pre-approved loans, you can improve your car loan eligibility.
5. Suitable loan tenure:
By choosing a loan tenure that does not inflate your EMI, you can improve your loan eligibility. If the EMI does not eat up too much of your income, it can get approved faster. You can decide a suitable loan tenure by using a car loan EMI calculator which will tell you the EMI for different tenures. Using a car EMI calculator is very simple and it returns results immediately based on the principal amount, the rate of interest and the loan tenure.
Author Bio:- Neha Sharma is an aspiring student in the field of finance. She spends her free time reviewing the latest apps introduced into the market. Check out her work as she mentions ways to increase car loan eligibility
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