Car loans are very handy for people looking to purchase a new and expensive vehicle. Lenders offer such loans so that you can get the desired car model and brand, even if you are unable to pay for the same in its entirety at that time. However, most lenders check to see whether a person is qualified to get a car loan.
Here are certain factors that affect your car loan eligibility and most of these will be verified by the bank prior to sanctioning the said loan.
1. Income
Your income will determine whether you are eligible for the loan amount you have applied for. People with higher annual income will be offered higher car loans and vice-versa. This is because people who have a greater income are also more likely to pay off a bigger loan easily. After you apply for the loan, you have to present an evidence of your income, based on which the lenders will decide the loan amount you are eligible for.
For salaried employees, the loan may range from anywhere between 2 and 3 times the annual income of that individual. For instance, if you have an income of Rs. 2 Lakhs per annum, you may get up to Rs. 4 Lakhs or Rs. 6 Lakhs as car loan. However, for a self-employed individual, the maximum loan is usually 6 times that of their annual income.
2. Credit score
Credit score is a measurement which quantifies how good you are at repaying loans and credit. This score is created after checking the history of paying off loans and credit card bills. Usually, a score of 750 and above is considered to be good and most banks offer loans to people maintaining such a score. However, if your score is below this level, it may be difficult for you to get the car loan sanctioned.
To improve the score, take small loans from lenders and pay them off in a timely fashion. You can also ensure that your credit card debt is settled on time. Try to maintain the score if you want to get the best offers on car loans. This score is a big factor that determines car loan eligibility.
3. Age
The age matters with most loans and car loans are no different. In case of a car loan, lenders prefer people below the age of 50. This is because people over this age are nearing retirement and may not be able to pay off the loan amount before the tenure runs out.
So, consider these factors prior to your loan application and make sure that all of your documents are in order so that your application gets sanctioned.
Here are certain factors that affect your car loan eligibility and most of these will be verified by the bank prior to sanctioning the said loan.
1. Income
Your income will determine whether you are eligible for the loan amount you have applied for. People with higher annual income will be offered higher car loans and vice-versa. This is because people who have a greater income are also more likely to pay off a bigger loan easily. After you apply for the loan, you have to present an evidence of your income, based on which the lenders will decide the loan amount you are eligible for.
For salaried employees, the loan may range from anywhere between 2 and 3 times the annual income of that individual. For instance, if you have an income of Rs. 2 Lakhs per annum, you may get up to Rs. 4 Lakhs or Rs. 6 Lakhs as car loan. However, for a self-employed individual, the maximum loan is usually 6 times that of their annual income.
2. Credit score
Credit score is a measurement which quantifies how good you are at repaying loans and credit. This score is created after checking the history of paying off loans and credit card bills. Usually, a score of 750 and above is considered to be good and most banks offer loans to people maintaining such a score. However, if your score is below this level, it may be difficult for you to get the car loan sanctioned.
To improve the score, take small loans from lenders and pay them off in a timely fashion. You can also ensure that your credit card debt is settled on time. Try to maintain the score if you want to get the best offers on car loans. This score is a big factor that determines car loan eligibility.
3. Age
The age matters with most loans and car loans are no different. In case of a car loan, lenders prefer people below the age of 50. This is because people over this age are nearing retirement and may not be able to pay off the loan amount before the tenure runs out.
So, consider these factors prior to your loan application and make sure that all of your documents are in order so that your application gets sanctioned.
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