Having a car of your own can make a big difference to your life, whether for managing errands, family trips, or daily commute. However, getting a car loan might seem difficult if your CIBIL score is low.
While most lenders prefer applicants with high credit scores, some institutions do offer car loan for low CIBIL score applicants by evaluating other factors such as income stability, job profile, or existing assets. These loans may come with stricter terms, such as higher interest rates or a larger down payment, but they offer an opportunity for bad CIBIL car loan borrowers to finance their vehicle purchase.
As long as you meet the requirements for basic eligibility and exhibit financial stability, many lenders now finance new or used cars for applicants with credit scores as low as 600. Understanding the process in detail is essential to improve your chances of approval and avoid loan rejection.
Wondering how to get car loan with low CIBIL score? In this guide, we break down the step-by-step process of getting a car loan with a low credit score in India.
Eligibility for Loan Application Acceptance
For a lender to accept your low CIBIL car loan application, the standard eligibility criteria include the following:
The age of the applicant must be between 21 and 65 years.
Salaried individuals must have a minimum salary of ₹3 lakhs per annum with minimum work experience of one year.
Self-employed individuals must be the proprietor of the business with a minimum annual income of ₹3 lakhs. Additionally, the business must be at least one year old.
Minimum CIBIL Score Required to Get a Car Loan
In India, a CIBIL score of 750 or above is generally considered ideal for securing a car loan with favorable terms. This score reflects a strong credit history, increasing the likelihood of low credit score car loan approval. However, some lenders may consider applicants with scores as low as 600, though such cases often involve higher interest rates and stricter loan conditions.
Do note that while a high CIBIL score improves your borrowing prospects, other factors like income stability, employment history, and existing financial obligations also play a crucial role in the approval process. Therefore, maintaining a good credit score, along with a stable financial profile, is essential for a smoother car loan application experience.
Helpful Tips to Get a Car Loan with a Low Credit Score
A score below 600 could significantly lower your chances and result in more stringent loan conditions or higher interest rates. Use these strategies to secure a car loan for low CIBIL score.
Tip
Impact
1. Avoid Multiple Loan Applications
Helps maintain a clean credit report and avoids unnecessary obligations.
2. Clear Existing Debts
Improves creditworthiness to lenders.
3. Make a Bigger Down Payment
Reduces loan value, interest rates, and processing fees.
4. Compare Interest Rates & Use EMI Calculator
Helps find affordable loan options and estimate monthly repayment.
5. Add a Co-applicant or Guarantor
Increases chances of approval by strengthening your profile.
How to Improve CIBIL Score for Car Loan
To get a car loan for low CIBIL score, start with working on increasing your score in a consistent manner:
1. Timely payments
Your payment history significantly impacts your credit score. Pay your credit card bills and EMIs on time to build a positive repayment history.
2. Maintain low utilization
Keep your credit utilization ratio below 30% of your total limit by managing your debt obligations.
3. Avoid multiple applications
Avoid applying for multiple loans or credit cards in a short period. Each application triggers a hard inquiry, potentially lowering your score temporarily.
4. Maintain a healthy credit mix
A balanced mix of secured and unsecured debt can positively influence your score.
5. Review credit report regularly
Keep an eye on your credit report from time to time. Analyze it for inaccuracies or outdated information; dispute any discrepancies to maintain a healthy score.
Key Details About Tata Capital’s New Car Loan
Bring home the car of your dreams with Tata Capital’s New Car Loan. Our reliable and flexible financing solutions are designed to help you inch closer to your dreams. With over 18 years of experience in the loan industry, Tata Capital has established a reputation for trust and customer satisfaction.
Choose Tata Capital’s new car loans for:
High Loan Amounts: Secure up to ₹50 lakhs to get a brand new car home!
Competitive Interest Rates: Enjoy attractive interest rates starting at 9.49% per annum.
Flexible Loan Tenures: Choose a repayment period of up to 84 months that aligns with your financial goals.
Trusted Brand Legacy: With a strong presence in the lending sector, Tata Capital brings credibility and reliability to your car financing experience.
Quick Processing: Experience swift loan processing and disbursal and drive home your new car without unnecessary delays.
Conclusion
Securing a car loan for low CIBIL score can be challenging, but not impossible. While it may require additional effort and preparation, lenders are increasingly open to evaluating borrowers beyond just their credit score.
By improving your financial profile, exploring lenders, and considering trusted institutions like Tata Capital, you can still fulfil your dream of owning a car. The key lies in being informed, prepared, and financially responsible throughout the process.
Yes, a defaulter can get a car loan, but it may involve higher interest rates or require a guarantor, especially if your credit history is poor.
How to clear CIBIL history?
To clear your CIBIL history, repay outstanding dues, request a credit report update, and maintain timely payments to improve your credit score over time.
Can I get a car loan without CIBIL score?
Yes, some lenders offer car loans without a CIBIL score, especially for first-time borrowers, though interest rates may be slightly higher.
Can I get a car loan with a ₹40,000 salary?
Yes, with a ₹40,000 monthly salary, you can qualify for a car loan, depending on your credit score, existing EMIs, and overall financial profile.
29 April 2025
5 mins read
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