FACT: A record 3.8 million passenger cars and commercial vehicles were sold in India in 2021.
This fact gives you a clear insight into India’s aggressive demand for personal and commercial vehicles. The easy availability of auto loans has further increased vehicle sales across the country.
A credit loan can help you with the lowest interest rates and quick loan approval if you are also planning to purchase your dream motorcycle or car.
Not everyone is familiar with the whole approval process when it comes to vehicle loans. Obviously, most people only take a vehicle loan once in their life to bring home their dream vehicle.
Hence, you must know the factors that affect your auto loan request from various aspects. Let’s discuss them all.
Your Credit Score Matters the Most: Credit score is the crucial component of your credit report that is considered for your auto loan approval. People with a higher credit score (above 750) get quick loan approval. On the contrary, borrowers with bad credit face challenges in getting loan approval.
This doesn’t mean bad credit owners can’t get an auto loan. You can get a loan with a high-interest rate. Moreover, you may also qualify for other credit facilities like personal loans, payday loans, etc.
Loan Repayment Tenure: You can get an auto loan for duration between two to seven years. Selecting your repayment tenure is essential as it decides your EMI that will become a significant portion of your monthly budget.
If you are financially prepared, it’s better to pay a down payment and convert the rest into a short-term loan period. Moreover, you should prepare your budget to save additional lump sum payments toward your vehicle loan.
It will help you clear the loan quickly and get your NOC.
Loan on New vs. Used Cars: Nowadays, you can get a vehicle loan for a new or used vehicle. It’s important to note that interest rates on new cars are lower than used cars. The value of every car depreciates every year. That’s the major reason behind the high-interest rate.
You should evaluate whether a new or pre-owned car is worth buying via auto loan. In the long run, you are suggested to choose a new car as you get a low-interest rate with a long lifespan.
Your Income & Occupation: Without a stable and secure job, it’s tough to pay the auto loan EMI; that’s a fact. That’s why your income and occupation play a vital role in auto loan approval. It’s better if you have a handsome salary.
However, if your salary doesn’t meet the criteria for an auto loan, you must have a stable job. It means you must have a working experience of more than six months with your current employer.
If you are searching for the right auto loan, you should follow the above-given points and do thorough research in selecting the best lender. Remember, time investment in research can help you get a low-interest rate and additional benefits.