CIBIL score for loan applications is one criterion that is required to be fulfilled even when booking a car or Pre-owned Car Loan. For getting a car loan or Pre-owned Car Loan, a good CIBIL score is required as it ensures the lender about the individual’s financial discipline and ability to repay on time. This helps in determining the risk factor for lenders. They then rely on this score to evaluate the application sanctions and even the repayment terms post-approval.
A higher CIBIL score increases the likelihood of quicker loan approval and will definitely help you negotiate better terms, like lower interest rates and longer repayment tenures. However, if an individual has a poor CIBIL score it can hinder their loan approval chances and lead to less favourable loan terms.
Credit Information Bureau (India) Limited (CIBIL) is India’s leading credit rating agency. The agency provides a three-digit score to individuals that indicate their ability to handle credit. This score comes in helps whenever an individual applies for a loan or a credit card. Lenders generally do a CIBIL score check with a PAN card when determining eligibility for various loans, including car loans and Pre-owned Car Loans. This score is calculated on the basis of repayment history, financial behaviour and a few more factors and it ranges between 300 and 900, with a higher score indicating a better credit-handling ability.
Now that the importance of having a good CIBIL score to secure a car loan is clear, let’s look into what exactly is a good CIBIL score for car loan. The exact score requirement will differ from lender to lender, but, a CIBIL score of 750 or above is considered ideal for a car loan or Pre-owned Car Loan. If your CIBIL score lies in the range of 750-900, it assures the lender that the borrower has a healthy credit history and are likely to repay the loan timely. However, it's important to note that even if your score lies in a range below 750, you may hold a chance to be eligible for a car loan, probably with potentially higher interest rates or unfavourable terms.
Along with the CIBIL score individual loan approvals depend on various factors like income, employment history, lending institution's policies and debt-to-income ratio. It is always advisable to check various lenders and their policies before zeroing in on one lender. Poonawalla Fincorp offers Pre-owned Car Loans and even Auto Lease Loans at flexible terms.
In order to get a car loan at good terms it is crucial to maintain a CIBIL score above 750, so here are a few tips to help you maintain a healthy credit score:
Late and untimely payments can have a negative impact on your credit score. You must make it a priority to pay all your bills, EMIs, and credit card bills, on time.
Credit utilization refers to your credit card usage with respect to your available credit. It is advisable to keep your credit utilization under 50%. If you exceed your usage above 50% it indicates heavy reliance on credit that can be viewed as a risk by lenders.
Having a combination of various types of credit, such as credit cards and loans can positively influence your credit score. It demonstrates the borrower’s ability to manage financial obligations responsibly.
Every time one applies for a new loan or credit card, it generates a credit inquiry. Multiple inquiries within a short period can negatively impact your CIBIL score. Hence, it is advisable to limit credit inquiries and apply for credit only when required.
Your credit report contains valuable information about your credit history. You must periodically review your credit report to help identify any errors or discrepancies that may impact your score negatively. If you find any inaccuracies, you can report them to the credit bureau for rectification.
By following these basic guidelines, you can maintain a healthy credit profile and increase your chances of securing a car loan with favourable terms.
Armed with this information you can now keep a check on your CIBIL score regularly and fulfil your goal of owning a car with Poonawalla Fincorp. By keeping your score above 750 you can get a good deal with Poonawalla Fincorp, on Pre-owned Car Loans and Auto Lease loans.
Poonawalla Fincorp can help you check your credit score and prepare you to take a step towards owning your dream car. Additionally, we at Poonawalla Fincorp offer loans for many purposes. Be it a Personal Loan or even a Business Loan. With a wide range of loan products available with us, you can choose any to achieve your goals!
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