Owning a car is a dream most of us have. However, a car purchase is a big-ticket expense and often requires a huge amount of funding. In such a case, buying a used car can be a smart and economical choice if you have a limited budget. Although the process of finding the right second-hand car may be time-consuming, financing it can be hassle-free by opting for a used car loan online.
It is important to meet a list of eligibility criteria to avail of a used car loan. One such critical aspect is having a good CIBIL Score. Lenders typically tend to approve used car loan applications with a credit score of 650 or higher as a general guideline. Nonetheless, having a lower CIBIL Score does not necessarily disqualify you from applying for a used car loan.
Here are a few ways to get a used car loan if you have a low credit score
Maximise your benefits by making a higher down payment
Applying for a large amount with a low credit score can either result in a high interest or your application might get rejected. Alternatively, you can increase your loan amount eligibility by making a higher down payment. In such a case, the loan you take out may reduce significantly and thereby lower the loan-to-value ratio. This effectively decreases the risk for the lender making it easier for you to avail of the loan.
Add a co-applicant
You can include a co-borrower with a good credit score as an alternative in case if you have a low credit score. This will help you improve your used car loan eligibility and avail a larger loan amount with the help of your co-applicant’s creditworthiness.
Additional read: Guide to getting a used car loan without income proof
Lender research and comparison
It is advisable to do adequate research and comparison between lenders, who specialise in offering loans to those with a low credit score. During your research, take note of the specific criteria and requirements set by each lender. Some lenders may have more flexible credit standards, considering factors beyond just your credit score. Comparing lenders and their offerings will allow you to make an informed decision and choose a lender that offers loans at flexible terms and conditions.
Additional read: How to get a zero down payment used car loan
Provide your investment and financial stability proofs
You can share your investment proofs as evidence of your financial stability to compensate for a low credit score. All the essential documents for a used car loan such as proof of income, employment history, bank statements, and others can be provided to the lender. This will help you to show your repayment capacity to the lender. It might also boost your chances of getting a loan from the lender and the same will also increase your chances of the loan application getting accepted.
Bajaj Finance provides used car finance that comes with several advantages, including doorstep assistance and competitive interest rates on pre-owned car loan. You can avail of a Bajaj Finance Used Car Finance with a credit score of 650 or higher, along with meeting the other basic eligibility requirements.
