Why is CIBIL Score Important to Get a Used Car Loan
A good CIBIL score increases your chances of loan approval and helps you secure a Used Car Loan at attractive interest rates, resulting in long-term savings. A positive credit history can also lead to more favourable loan terms and greater negotiation power with lenders. It expedites the loan approval process, allowing you to acquire your desired used car quickly in a hassle-free manner.
A poor credit score is lower than 600, identifying you as high-risk with low creditworthiness. While CIBIL defaulters with a score less than 600 can still apply for car loans, approvals become tougher, and interest rates can be much higher.
Minimum CIBIL Score Required for a Pre-owned Car Loan
The minimum credit score for a Pre-owned Car Loan typically falls in the range of 750 to 900, although it may vary between different lending platforms. Lenders use this score as a benchmark to assess your creditworthiness and car loan eligibility. Naturally, people with higher scores generally get more favourable terms and attractive interest rates.
Things to Consider Before Applying for a Used Car Loan for CIBIL Defaulters
Check Your Credit Report
There could be many reasons for a low CIBIL score, including errors on your report caused by duplicate accounts, misprints, or fraudulent activity. These could unnecessarily lower your score, wrongly reflecting low creditworthiness. Before you start the loan application process, check your credit report to ensure there are no errors. If found, opt for credit repair services to promptly correct them.
Consider the Total Cost of Ownership
When buying a used car, it's crucial to consider the total cost of ownership beyond just the purchase price. Factor in expenses such as insurance, maintenance, fuel, and registration fees. Make sure you can comfortably afford all of these costs in addition to your auto loan payments.
Set a Realistic Budget
Setting a realistic budget will help you narrow down your options and avoid overextending yourself financially. Consider factors such as your monthly income, expenses, and any existing debts. Keep in mind that a poor credit score may result in higher rates of interest and approvals on lower loan amounts. Choose an amount to borrow accordingly. You can use a used car loan EMI calculator to set your budget.
Compare Lenders
Shop around and compare loan terms from multiple lenders to ensure you are getting the best deal possible. Look for lenders that offer specialised loans for people with low CIBIL scores, and consider NBFCs that offer flexible repayment options and proactive customer service.
Understand the Terms of the Loan
Pay attention to details such as the Used Car Loan interest rates, loan term, monthly payment amount, and any additional fees or charges. Calculate your monthly EMIs to create a repayment plan so that you can slowly improve your credit history and avoid defaulting. Ask questions if anything is unclear and ensure that you are comfortable with the terms before committing to the loan.
Read the Fine Print
Don't overlook the fine print in your loan agreement. Make sure you carefully read and understand all the strict loan terms and conditions before signing. Check all the details, such as early repayment penalties, late payment fees, and any other potential pitfalls that could impact your ability to repay the Second-hand Car Loan.
Eligibility Criteria for a Used Car Loan for CIBIL Defaulters
Meet the other basic eligibility requirements to increase your chances of used car loan approval:
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Age: 21 to 60 for salaried individuals, 24 to 65 for self-employed individuals, minimum age of 24 for partners/proprietors
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Experience/Vintage: Criteria differ across employment status and loan amount
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Citizenship: Indian
Click here to read more about Used Car Loan eligibility criteria in detail.
Tips to Get a Used Car Loan for CIBIL Defaulters
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Take on a Co-applicant - Applying for the loan with a co-applicant who has a higher credit score significantly increases your chances of used car loan approval.
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Larger Down Payment - Putting a large sum as a down payment reduces your total car loan amount, overall tenure, and interest rate, increasing the chances of approval.
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Use Collateral - Providing collateral upfront helps reduce the risk on the lender's side, enabling easier loan approval. Just keep in mind that defaulting will lead to the lenders seizing your collateral, so a secure repayment plan is essential.
Happy Customers, Happy Us
I opted for a Loan Against Property balance transfer with Poonawalla Fincorp, and the experience exceeded my expectations. The application process was completely digital, quick, and required minimal paperwork. Getting a significantly lower interest rate helped me reinvest in my business. With better financial flexibility, I was able to scale operations efficiently, leading to a 30% increase in business turnover. Poonawalla Fincorp made the entire journey stress-free, and I highly recommend their services to any business owner looking for smart financial solutions.
Poonawalla Fincorp’s Pre-owned Car Loan made the entire financing process effortless. The loan approval was quick, and the minimal documentation made it even more convenient. Within just a couple of days, the funds were disbursed, allowing me to purchase a well-maintained pre-owned vehicle without any hassle. The repayment options were flexible, and the entire experience was seamless. Thanks to Poonawalla Fincorp, I could get my car without any financial strain. Highly recommended!
Securing a loan to purchase a commercial property with rental income was crucial for my business. Having previously worked with Poonawalla Fincorp, I was confident in their services. The process was incredibly smooth and transparent. The quick disbursement and excellent post-sales support made the entire experience stress-free. Thanks to Poonawalla Fincorp, I now own a prime commercial property in Mumbai, which has significantly boosted my business. Their quick turnaround time and excellent post-sales support made all the difference. I wholeheartedly recommend them to anyone in need.
I had a great experience with Poonawalla Fincorp’s Pre-owned Car Loan. The offered loan amount was as per my expectations, and the entire process was smooth and hassle-free. The documentation was minimal, and the loan was disbursed in just two days! What stood out was the flexibility—repayment was easy, and the EMI structure was well-planned. The loan approval process was straightforward, making it convenient to get the car I wanted without any delays. Overall, the service was excellent, and I highly recommend Poonawalla Fincorp to anyone looking for an easy and quick loan process!
A friend in need, is a friend indeed. Poonawalla fincorp has been like one of those friends for me, who has supported me in my journey. With no hidden charges and no prepayment charges, the company has provided me with the adequate funds I needed for me professional practice. From the loan application process to the disbursal of funds, I did not face any problems. My experience was hassle-free and smooth. Not just me, all my fellow professionals and friends have had a wonderful experience with Poonawalla Fincorp’s Professional Loan.
I am practicing Chartered Accountant (CA) based out of Hubli. There were working capital issues that i was facing like upgrading my firm’s overall infrastructure, hiring well-qualified staff and digitization. Poonawalla fincorp hab been of great support when it comes to funding these requirements. I’ve got one of the best interest rates available in the market, my documentation process was fast & hassle-free. and the digital application process made it very simple to get a Professional Loan as a CA. I recommend to CAs to consider Poonawalla Fincorp for their working capital or any other funding requirements.
I run a chain of farmacy stores with 5 branches in pune. With the growing polpularity of home delivery, my customers were expecting the same from me as well. However, the extra capital requirement made it difficulf for me to hire delivery persons. With Poonawalla fincorp’s Business loan, I am now able to compete with online pharmacy retailers, manage working capital and upgrade my system. My customers have grown 50-60%. The loan applicatipn process is digital, simple and speedy. I was delighted to get my loan amount disbursed quickly, allowing me to upgrade my operationg seamlessly.
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Frequently Asked Questions
The minimum CIBIL score required for a used car loan is 750. It's possible to get a loan with a low credit score; however, the interest rates are likely to be high. Your CIBIL score ranges from 300 to 900, with a score below 600 indicating a default.
Poor credit history can negatively impact your car loan application process. You can improve your CIBIL score by making timely payments on existing debts, maintaining low credit card balances, and avoiding applying for new credit. Repaying a used car loan on time can help rebuild your credit score.
Yes, a CIBIL check is standard practice to assess your creditworthiness and loan eligibility for a used car loan. An ideal score is above 750 for speedy approvals and beneficial car finance terms.
You can check your CIBIL score for free on Poonawalla Fincorp’s official website and the Poonawalla Fincorp app.
If you have a good credit score, you may be eligible for around 80% to 90% of the car’s value as a loan amount, with a repayment tenure ranging from 12 to 60 months. Poonawalla Fincorp's Used Car Loan offers up to 100% of the car's value and an even longer tenure, ranging from 12 to 72 months.
Here are the documents required for a used car loan:
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Identity proof
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Address proof
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Income proof
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Employment/business continuity proof
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Co-applicant documents
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Vehicle documents
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Passport-sized photographs
Most lenders require evidence of stable income and bank statements to approve a used car loan application.
Pre-owned Car Loan interest rates depend on factors like your credit score, financial stability, vehicle age, loan amount, and tenure. Good credit history, stable income, newer vehicles, larger down payments, and shorter tenures usually lead to lower rates. Rates also vary by lender type and prevailing market conditions.
CIBIL retains records of payment defaults for 7 to 10 years, affecting future credit. This emphasises the need to plan finances and repayment tenures wisely.