Your wish of car is getting the impetus from attractive financing options in the form of lower interest rate, discounts, zero down payment schemes, etc. But despite all the options, your car loan application can get rejected, eluding you from the opportunity to buy the car. This can happen on account of some silly mistakes and ignorances with respect to car loan eligibility. So, we have highlighted few mistakes that you must avoid to ensure your car loan application gets the green signal from the lender you opt for.
Poor credit score
Poor credit score can lead to the rejection of your car loan application by banks and non-banking finance companies (NBFCs). Generally, your credit score worsens on account of default in the previous loans and credit card payment. The credit score will also get bad if you constantly check the same as it gives an impression to the lenders that you are desperately looking for the loan but do not have a good credit history. So, avoid doing the same and boost your credit score and thus enhance the chances of your car loan application getting the nod from the lenders. While you apply for car loan, you must ensure you have the CIBIL score of over 750 to get the acceptance of the lenders. Very few lenders will be willing to offer you car loan on a CIBIL score below 750.
Low income and job stability factor
Most of the people look to buy Sports Utlity Vehicles (SUVs), which have caught the imagination in terms of look and feel. But their low income play the spoilsport and thus compel lenders to reject their car loan application. For example-If you are a salaried professional with monthly income of say Rs 20,000 and wish to buy Mahindra TUV 300, an SUV costing in the range of Rs 7.11 lacs-9.34 lacs, then the Equated Monthly Installments (EMIs) will be around Rs 10K-13K, coughing out 50-60% of your income and thus increasing the incidences of default in payment. This will lead bankers to believe that you are not the right candidate to get the finance for cars like SUVs. Ideally, EMI should constitute 20-30% of your income and must not go beyond 40%. So if you have a low income, then you need to buy cars that will not only fit into your budget but also convinces your lender to approve the loan. Furthermore, if you have the habit of constantly switching the job say in 6 months time, then you do not become eligible for car loan as it requires a minimum work experience of one year with the current employer.
Silly mistakes can also result in the rejection of your car loan application. Common mistakes include incorrect personal details, wrong professional and residential address, incorrect details of references, etc. Lenders appoint representatives who visit your residence and office, and if any discrepancy is found, then your car loan application may get rejected.