If you are planning to apply for a Car Loan, make
sure to compare different offers provided by various financial institutions and
choose the most viable options. It is imperative to consider the Car Loan interest rate
and understand terms and condition before applying. Here we are listing down
five factors which will affect your loan application:
- The Credit Score
When you apply for a
loan, the financial institution will evaluate your credit score based on your
payment history and income. If you already have the debt of any other loan,
make sure that there is no lapse and you have got enough resources to pay for the
new liability. The credit score plays the most critical part in securing a loan
so, keep paying your instalment on time. Timely payment will increase your
chances of getting the loan at once after completing the documentation
formalities.
- Utilisation of Credit
When you apply for a
loan, the financial institution evaluates your credit limit based on the assets
and income that you generate. It is always advisable to credit utilisation as
low as possible to minimize the risk of a lapse in repayments. For instance, if
your credit limit is 20 lakh and you secure a loan worth 1 lakh, your credit utilization
ratio will be 5%, which is reasonably low and worth a risk.
- The History of Repayments
When you apply for a car finance,
it is imperative to pay the EMI on time, this keeps your credit score healthy
and allow the financial institution to trust your abilities in repayment.
Payment on time will not mount unnecessary pressure and rate of interest, and
it also facilitates in future. Any default in repayment will bring down your
image, and financial institutions will be reluctant to lend you any financial
help.
- Tenure of Debt
Debt tenure is the
duration for which you take the loan. The financial companies who offer the
loans consider the period for which you require the amount. If you avail a long-term
loan and paying the instalment on time, this will make a positive impact on
your credit score.
- Differentiation of Credit
The financial
institutions prefer those clients who ask for secured loans such as a home or a
car loan; it gives a positive impact on your credit score. A credit card
or a personal loan is an unsecured loan, and they are not very healthy for the
credit score.
There are many factors which should be considered at the time of the loan application whether you are capable to repay the loans at the future or if you have other loans previously and for that you should take the help of the guaranteed car loans with bad credit companies as thy will assist you and get the loan approved with in a days for car buying.
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