Whether you need private commute for your everyday needs or plan to go for long-distance travels, car ownership can complement this need the best. These vehicles no doubt offer space and comfort while travelling too. You may further make use of it for as long as you want just with timely servicing and repairs of the vehicle. The availability of the likes of comprehensive insurance cover only adds to the convenience of car ownership and maintenance.
All you need to do is make a make a one-time investment on car purchase. The availability of used cars and their financing from institutionalised lenders has made car ownership more affordable than ever. As the used car loan eligibility requirements are easy to meet, access to these loans does not bring much of a trouble.
All you need to do is check if you meet all the lender-based requirements related to your borrowing profile or not when availing a the loan for used car purchase. In case you fall short of any eligibility requirement, you can always work up on your profile for better accessibility to the loan.
We bring you some smart ways that can help with your overall eligibility improvement for availing the loan with ease. To start with, let’s check out the standard eligibility requirements across lending institutions first for a better understanding of the aspects for improvement.
Minimum Eligibility Requirements for Used Car Loans
To avail a used car loan with ease, you must meet the following common criteria.
- Age between 20 and 60 years
- – Must be a salaried or a self-employed individual
- – Should earn stable income
- – If salaried, should be employed for at least 6 months in the current job
- – If self-employed, must carry a current business vintage of not less than 1 year
- – Should earn minimum monthly income as per the city of residence
- – Must hold a residing Indian citizenship with a minimum 1 year of stability
Accordingly, one must provide the necessary documents as well to back up the used car loan eligibility fulfilment.
Additionally, for the car –
- It must not be older than 2 years.
- It should not have more than 2 previous owners.
Iii. All the car related documents must be in place and updated.
While these are not hard and fast requirements, sticking by them helps with easy availability of the advance. A credit score of more than 700 is a plus and can work in favour of availing the lowest used car interest rates.
Now, let’s check out some smart ways that can help with eligibility improvement for your used car loan financing.
Look Out for Pre-approved Financing Under Used Car Loans
Pre-approved used car loans are usually provided to existing customers of the financial institution. The loan is extended on the basis of existing financial and credit records of the borrower. Applying for a pre-approved used car loan thus does away with the need to go through extensive eligibility checks by the lender. Hence, the loan is also processed fast, thus making quick financing possible.
Work on Your Credit Score Improvement
Even though not a part of mandatory used car loan eligibility requirements, a high credit score may improve your chances of easy loan approval. It is because a high credit score represents the overall creditworthiness of an individual, as per the past credit records that would most probably carry a decent repayment record. The factors thus combine to make the borrower holding a high credit score less prone to the risk of repayment delay or default, enabling easy aprpoval.
Keep Your Fixed Obligation to Income Ratio (FOIR) Under 50%
The FOIR of an individual indicates the fixed monthly liabilities as a percentage of the fixed monthly income that an individual may receive. Lenders consider a FOIR of under 50% healthy for the purpose of providing advances like used car loans. It is thus best to check your FOIR before applying. If possible, try to bring it down via existing EMI or credit card bill in a lump sum to better avail the loan.
Apply with a Co-borrower
In case your borrowing profile does not meet all the used car loan eligibility requirements adequately, you may apply for the loan with a co-borrower holding a high credit score and all other requirements. It helps raise the overall capacity for availing the loan, thus bringing easy financing approval.
Apply with a Financial Institution You Hold a Credit History With
To end, it is best to apply for the loan with a financial institution you already hold credit history or transaction history with. It will help leverage the lender relationship for easy approval of your used car loan.
Your total credit utilisation and total income are also factors that impact your overall used car loan eligibility. Thus, keep your monthly utilisation out of the total monthly available credit under 30%. Also, provide all primary and secondary income documents to support your used car loan application with improved chances of quick approval.