Need a used car loan? Here are simple ways to make the process easy

People opt for a car loan to ease the financial burden when purchasing a used car. However, obtaining approval for a used car loan can sometimes be challenging. To increase your chances of loan approval and secure favourable terms, you can employ several effective strategies.

This article will outline key steps to improve your used car loan eligibility, ensuring a smoother financing process. Let's explore. 

Eight effective ways to secure loan for an old car
 

• Maintain a good credit score 
  
  

  Lenders consider your credit score. A higher credit score demonstrates your creditworthiness and reduces perceived risk. Pay your bills on time, keep credit utilisation low, and avoid too many hard enquiries for securing credit via loans. 

  Monitoring your credit report for inaccuracies can also help improve your credit score and increase used car loan eligibility.

• Establish a stable source of income 
  
  

  Lenders prefer borrowers with a stable income source to ensure timely repayment. Maintain a consistent job history and avoid frequent job changes when you apply for a used car loan. 

  Demonstrating a steady income suggests that you have the financial means to repay the loan on time.

• Borrow an affordable amount 
  
  

  When applying for an old car loan, calculate your budget carefully and borrow only what you can afford. 

  Lenders assess your debt-to-income ratio to evaluate your ability to manage additional debt. Keeping your monthly loan repayments within a manageable range of around 30% DTI increases your chances of loan approval.

• Consider a co-applicant 
  
  

  If you have a low credit score or income, consider adding a co-applicant with a strong credit history or higher income. A co-applicant can enhance your eligibility and strengthen your used car loan application.

  Ensure the co-applicant understands their responsibilities and the implications of jointly applying for a loan.

• Make timely repayments 
  
  

  Building a track record of timely repayments is essential to improving your creditworthiness. Paying your existing debts, such as credit cards or previous loans, on time helps establish a positive payment history.

  Consistent and punctual loan repayments enhance your credibility as a borrower, and you will likely receive lower used car loan interest.

• Research the eligibility criteria 
  
  

  Different lenders have varying eligibility criteria for used car loans. Thoroughly research and compare the requirements of different lenders to identify those that align with your financial situation.

  Understanding the specific criteria can help you make informed decisions and choose the most suitable lender for your needs.

• Arrange down payments and documents 
  
  

  Having a substantial down payment demonstrates your commitment and reduces the loan amount. Save up and set aside a significant portion of the car's purchase price as a down payment.

  Additionally, gather all necessary documents, such as income proof, address proof, identity proof, and employment details, to streamline the loan application process.

• Approach a reputable lender 
  
  

  Choosing a reputable lender is vital to securing favourable loan terms and a smooth borrowing experience. Research and select a lender with a strong track record of providing used car loans.

  Consider factors such as used car loan rates, tenure, customer service, and transparency when evaluating lenders.

Also read - 7 Important Questions To Ask Before Taking A Car Loan

Apply for a used car loan today

Obtaining approval for a car loan for used cars may seem challenging, but it is within your reach with the right approach. By implementing these strategies, you -

• Increase your chances of loan approval 
• Pave the way for a smoother borrowing experience

Cruise in your desired used car with IDFC FIRST Bank Car Loans. Get an instant pre-owned car loan with minimal documentation and a loan tenure of up to seven years. Happy driving!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.