If you're in the market for a brand-new model or a reliable used car, the road to car ownership often involves securing a car loan. When it comes to financing, improving your car loan eligibility can help you secure better terms and rates. Lenders consider various factors when approving car loans, so focusing on these key areas can increase your chances of getting approved.
Income and employment stability
Lenders prefer borrowers with stable jobs and a steady income. Ensure a consistent employment history and avoid frequent job changes. A higher income also improves your loan eligibility.
Keep your debt-to-income ratio low
Your debt-to-income (DTI) ratio is a key factor that determines your ability to repay the loan. Keeping this ratio low by paying off existing debts or increasing your income can improve your eligibility for a car loan.
Maintain a strong credit score
A strong credit score is crucial for loan approval. Paying bills on time, reducing credit card balances, and correcting any errors on your credit report can help boost your score. With a CIBIL Score of 700 or higher, you have a high chance of getting a car loan from Bajaj Finance Limited.
Additional read: How to get pre-approved for car loan
Increase the down payment amount
A larger down payment reduces the loan amount and shows the lender that you're financially stable. It also reduces the risk for the lender, making them more likely to approve your loan.
Select appropriate loan term
Choosing a shorter loan term allows you to repay the loan faster, but with a larger EMI outgo every month. A longer tenure will reduce your EMI, but increases the overall interest paid. Choose a tenure that suits your repayment capacity.
Consider adding a co-applicant
Adding a co-applicant with a strong credit history can improve your eligibility. Their income and credit score can strengthen your application, increasing the chances of loan approval.
Improving your car loan eligibility involves managing your finances responsibly and presenting a strong financial profile to lenders. By following these tips, you can enhance your chances of getting approved for a car loan with favourable terms.
Bajaj Finance offers two types of car loans – used car loans and new car finance. On one hand, you can opt for used car loans if you wish to finance the purchase of a pre-owned car. On the other hand, you can opt for a new car loan if you are planning to buy a brand-new car. Both these car loans come with simple eligibility criteria and minimal documents. You can apply for both these car loans in an easy online application process and benefit from our quick approval facility.
