A car loan is money borrowed from a financial institution by an individual/enterprise for purchasing a car
FACTORS AFFECTING CAR LOAN ELIGIBILITY
Credit Score: Financial entities check an applicant’s credit score to evaluate their past and current debt repayment behaviour and ability to repay. Applicants with a credit score over 750 enjoy higher probabilities of loan approval.
Type of Car: Cars are assets with depreciating value; hence their resale value is considered to determine loan eligibility. Cars with sought-after features have a higher resale value. Consequently, applicants intending to purchase such cars have higher chances of loan approval.
Employment Status: Salaried employees are required to have been working for at least 2-3 years and in their current company for at least 1 year. Self-employed applicants are required to have been in their current business for a minimum of 2-3 years.
Income: Applicants’ income is assessed to determine their ability to make timely EMI payments. Applicants with higher incomes have a higher probability of loan approval. Applicants with lower incomes receive loans of comparatively smaller amounts.
Employer’s Reputation: Applicants employed in major companies have a higher probability of loan approval. Applicants not working in such companies can loan a considerable amount only if their income is significant.
Relationship with Lender: Applicants who are existing customers of a financial institution and are on cordial terms can negotiate for larger loan amounts at lower interest rates.
