CIBIL Score for Car Loan

A car loan is one of the major loans that is availed by Indians to make their dream come true of having one’s car. Offered by leading banks, the funds offered along with the car loan have to be used to pay the amount for the car. However, one of the most important factors that is considered is the CIBIL score. A credit score within the range of 750 or above is considered acceptable by the bank. Apart from this, several other factors should be qualified by the candidate before availing of a car loan. In this blog, we will be discussing all those in detail.

How much is the CIBIL Score (Credit Score) required for a Car Loan in India?

The CIBIL score is the credit health report of a lender that is generated based on the borrower’s payment history across different loans and credit cards. The credit score is released bi-annually and is used to evaluate one’s creditworthiness. In India, the CIBIL score is announced by TransUnion. Generally, a CIBIL score in the range of 300 to 900 is considered to offer a car loan.

What is the minimum CIBIL score required for a Car Loan?

There are only so many minimum CIBIL score cut-offs for car loans in India. It varies based on the lender’s criteria. However, a score of 750 or above is generally considered ideal and significantly increases your approval chances.

How do I get a Car Loan with a bad or Low credit score?

Getting a car loan with a bad credit score can be challenging, but it’s not impossible. Here are some steps you can take to improve your chances of getting approved and getting a good deal:

1. Before applying for a car loan, one should check their credit score released by the competent authorities. One should be well aware of their credit health to understand their repaying capacity. Each of the three primary credit bureaus provides a complimentary credit report annually.
2. It is advised to improve the credit score before submitting the car loan application form. Even a small improvement in your credit score can make a big difference in the interest rate you’ll qualify for. There are several things you can do to improve your credit score, such as paying your bills on time, reducing your credit utilisation ratio, and keeping old credit accounts open.
3. A larger down payment will show the lender that you’re serious about the loan and that you’re a good risk. It will also reduce the amount of money you need to borrow, which can save you money on interest in the long run.
4. Not all lenders have the same criteria for approving car loans. Some lenders specialise in loans for borrowers with bad credit. Be sure to compare rates and terms from multiple lenders before you decide on a loan.
5. If you have a cosigner with good credit, it can significantly improve your chances of getting approved for a loan and getting a lower interest rate. A cosigner is someone who agrees to be responsible for the loan if you default on the payments.

What is a good CIBIL score range for Car Loan?

A good CIBIL score range for a car loan is between 750 and 900. The higher the score, the more chances are there to avail of a car loan.

How do I get a Car Loan for a low CIBIL Score?

If you are looking to avail of a car loan even though you have a low CIBIL score, then it is possible by considering the following factors.

• Do not underestimate the power of a healthy credit report. Obtain a copy and meticulously check for errors. Dispute any inaccuracies to ensure your score reflects your true creditworthiness. Additionally, focus on paying down existing debts and making all your bill payments on time.
• A larger down payment significantly strengthens your car loan application. By reducing the loan amount you require, you demonstrate greater financial responsibility to lenders. This makes them more comfortable approving your loan and offering a lower interest rate.
• Enlisting a co-signer with a good credit history can significantly improve your chances of loan approval. Their strong credit score bolsters your application and assures the lender of your ability to repay the borrowed amount. Choose a co-signer responsibly, someone you trust and who understands the commitment involved.
• Research alternative lenders other than traditional banks who cater to borrowers with lower credit scores. Non-banking financial institutions (NBFCs) like PayMe and credit unions often have more flexible lending criteria. Explore these options and compare their loan terms to find the one that suits your needs the best.

Also, read: How to improve credit score?

Importance of CIBIL Score in Securing a Car Loan

Those willing to secure a car loan have to furnish their CIBIL score before the lender. The financial well-being of a loan recipient is assessed thoroughly before sanctioning the car loan:

• A high CIBIL score (ideally above 750) significantly increases your chances of getting your car loan application approved by the lender. It assures them of your creditworthiness and responsible financial behaviour.
• A good CIBIL score translates into lower interest rates on your car loan. This can save you a substantial amount of money over the loan tenure. You might be offered a loan with a lower credit score but at a much higher interest rate.
• A strong CIBIL score can influence the loan amount you’re eligible for. Some lenders may offer a higher loan amount or more favourable loan terms for applicants with a good credit history.
• A healthy CIBIL score can expedite the loan approval process. Since your creditworthiness is already established, lenders may take less time to assess your application.

Frequently Asked Questions

What is the minimum CIBIL score for a car loan?

The minimum CIBIL score for a car loan ranges between 650 to 800.

Is 600 a good CIBIL score for a car loan?

No, 600 is not a good CIBIL score for a car loan, but that’s not something to worry about, because, with PayMe’s Credit Assist, you can get personalised solutions to improve your CIBIL score.

Can I get a car loan with a 550 CIBIL score?

No, if you have a 550 CIBIL score, then you need to improve it first before applying. You can get tailored solutions to fix your CIBIL within a couple of months with PayMe’s Credit Assistance.

What is the CIBIL score for car loans?

The CIBIL score for car loans ranges between 750 and 900.

How much car loan can I get on 25000 salary?

As a general rule, banks offer car loans around 3 to 4 times the monthly income of a person.

 Also, check:

• CIBIL Score for Bike Loan
• CIBIL Score for Personal Loan
• How to get a personal loan with a CIBIL defaulter status?
• How to check and remove your name from CIBIL’s Defaulter List?
• How do I contact CIBIL for Consumer Complaints? Check CIBIL Customer Care Number
• What are all the mistakes that Can Lower your Credit Score?
• CIBIL Login and Registration Process
• Credit Rating Agencies in India