HOW TO GET A CAR LOAN WITH A BAD CREDIT SCORE?

One of the most common types of loans that people all over the world consider taking is when they want to buy a car. This is because it is a type of asset that requires a significant amount of investment. But for people who are employed in a company or have their own start-up, shelling out a large sum of money can be a little difficult to manage. If you happen to be in the same boat, then taking a car loan from a reliable financial institution is highly recommended. This is simply because getting your car financed through a loan is a good way to gain its ownership without falling into a crunch. A lot of people worry about their credit score while planning to buy a car. Mentioned are some frequently asked questions that can help you understand the importance of your credit score in order to get a car loan:

• What are the different types of vehicle loans?

  In India, there are various types of loans made for those who want to buy a bike, car or even a commercial truck. A vehicle loan is based on the kind of vehicle you visit to buy with the loan. For instance, if you want to buy a new car, then there will be a specific car loan policy that you will have to learn more about. In cases where people are looking for a used car due to financial limitations or the lowest car loan interest rates, then you need to check out the best offers offered by financial institutions in the country. 

• What is defined as a bad credit score?

  Before understanding bad credit scores for taking car loans, you must understand the meaning of credit score properly. In the simplest terms, a credit score is created to understand the financial worthiness of an individual. In our country, Credit Information Bureau (India) Limited or CIBIL provides the credit score of all citizens. This is based on your financial track and history such as paying credit card dues on time, paying off loans in the given time duration, and the like. Getting a car financed with a bad credit score like 300 can be very tough. On the other hand, you can get a car loan with a credit score of 900.

• How can you improve your credit score?

  It is suggested to look for car loans with low-interest rates. This will help you in paying off the due amount within a short span of time. Taking this account, a vehicle loan of this kind can only be taken from a financial institution like Muthoot Finance by improving your credit score. If you are unaware of your credit score, then it is best to check it on the official website of CIBIL. The next step that you need to take is to check whether there are any errors in your credit score. If not, then you should settle all your payments and avoid taking any further loans. Car finance is only possible if you have a good credit score. Hence, tread carefully with your financial choices.

• Which financial institutions offer low-interest rates?

  The right way to find out about financial institutions that offer car loans with low-interest rates is by increasing your knowledge base. You can consult your family members and friends who have taken a car loan with a good credit score by paying less interest. Their experiences will help you in making the right choice. This is applicable even after you buy a car in order to scout different types of vehicle insurance available in the market. Besides this, you can research online and find top-rated financial firms that offer the lowest interest rates for taking car loans.

Suggested Read: 9 Best Practices to Improve Your Credit Score

Key Points to Note before Applying for a Car Loan

When you are sure about your credit score to buy a car with a loan plan, then it is time to consider a few points that play a key role in this process. Mentioned below are five factors that you must go through before taking a car loan:

• Type of Car - Most financial firms decide the interest rates for car loans based on the model, variant, and brand value. So, if you want to buy a luxury car then be prepared to pay a higher interest rate. Similarly, a car loan for a hatchback from a reputed automobile company would have a low-interest rate.
• Credit Profile - A car loan with a good credit score is a prerequisite that you must take seriously. Hence, it would be wise to have a decent financial track record.
• Steady Income - If you want to buy a car with a credit score, then having a steady income is important too. Thus, having a steady job further helps in increasing your chance to get a loan for a new or pre-owned car.
• Tenure - When you opt for a car loan with a long tenure then you will have lower EMI options. On the other hand, a short tenure will come with higher EMI provisions. Therefore, you should choose your car loan’s tenure according to your budget.

At Muthoot Finance, vehicle loans come with attractive interest rates, minimal documentation, quick loan processing, and pocket-friendly EMIs to suit different needs. Visit your nearest Muthoot Finance branch to know more.