Buying a car is among the important milestones in a person’s life. A car loan is almost always necessary to buy a car. After demonetisation, the car loan interest rate has also reduced significantly. Although a large number of companies are offering loans at tempting interest rates, most companies check your credibility before approving a loan. A surprisingly large number of individuals fail here, as they are not sure how to go about the application process.
Here is a list of the major factors that affect the success of your car loan application.
Your Credit Score
Your credit score reflects how well you have dealt with your previous loans. It includes previous and current credit accounts and payment history that assures the bank that you will repay the loan they forward to you. Loan approval becomes easier with better credit scores and vice versa. You can also bargain your car loan interest rate if you have a high credit score.
Income Vs debt
If your income is greater than your debt, your ability to repay the car loan increases. Therefore, the lender has more confidence in you and your chances of getting approval increases.
Down payment
The money you pay at the time of car purchase is the down payment. If your down payment is large, the bank has to pay less and the chances of approval are greater. Also, you can save on your car loan interest rate.
Duration of Loan
Shorter duration of repayment of loans increases your equated monthly instalments. It is best to choose tenure so that your equated monthly instalments do not cross 40% of your monthly income. However, lower tenure enhances the chance of approval.
Age of the Car
In case you are unable to repay your loan, the lender will seize and sell your car. A newer car with better resale value earns the lender better profits compared to an older car with low resale value. Thus, if you are buying a new car, the chances are you will get low-interest rates on your car loan.
With the knowledge to make the most of your car loan application, all you need to do is look for the best car loan that suits your needs at the lowest rates. With your application form, loan-processing fee and down payment ready, all you need to do is drive home in your brand new vehicle!
Here is a list of the major factors that affect the success of your car loan application.
Your Credit Score
Your credit score reflects how well you have dealt with your previous loans. It includes previous and current credit accounts and payment history that assures the bank that you will repay the loan they forward to you. Loan approval becomes easier with better credit scores and vice versa. You can also bargain your car loan interest rate if you have a high credit score.
Income Vs debt
If your income is greater than your debt, your ability to repay the car loan increases. Therefore, the lender has more confidence in you and your chances of getting approval increases.
Down payment
The money you pay at the time of car purchase is the down payment. If your down payment is large, the bank has to pay less and the chances of approval are greater. Also, you can save on your car loan interest rate.
Duration of Loan
Shorter duration of repayment of loans increases your equated monthly instalments. It is best to choose tenure so that your equated monthly instalments do not cross 40% of your monthly income. However, lower tenure enhances the chance of approval.
Age of the Car
In case you are unable to repay your loan, the lender will seize and sell your car. A newer car with better resale value earns the lender better profits compared to an older car with low resale value. Thus, if you are buying a new car, the chances are you will get low-interest rates on your car loan.
With the knowledge to make the most of your car loan application, all you need to do is look for the best car loan that suits your needs at the lowest rates. With your application form, loan-processing fee and down payment ready, all you need to do is drive home in your brand new vehicle!
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