Wondering why your lender did not approve your used car loan application? Well, from having a low CIBIL score to unstable employment history, there could be multiple reasons why your loan application was rejected. What are they? Read on to find out.
#1 Low CIBIL score
One of the most vital used car loan eligibility factors is your CIBIL or credit score, which helps lenders determine if you’re credit-worthy. Lenders want to be convinced that you will be able to pay back your loan in a timely manner. Hence, having a low CIBIL score can get your loan application rejected.
#2 Paperwork mistakes
Lenders require certain documents such as proof of your address, identity, income, and more. Submitting all the necessary documents in a transparent manner is a must, as this ensures there are no unnecessary delays during document verification the lender may not approve your loan. Make sure you don’t omit any information or share it incorrectly.
Additional Read: Tips to make used car loan application process easy
#3 Unstable income
Having a regular source of income is another vital eligibility criterion for availing of used car finance. Loan seekers without a steady source or flow of income draw additional scrutiny from lenders. Self-employed individuals such as freelancers or those with unstable employment history may find it challenging to convince lenders of their repayment capacity.
# 4 Limited credit history
Not having a credit history is as bad as having a poor one. This is because your lender will have nothing to understand your credit patterns, making it difficult to gauge your creditworthiness. If you are someone who hasn’t yet had the opportunity to establish your credit history, you’re more likely to face rejection as compared to those with a longstanding credit record.
Additional Read: How to Improve Your Chances of Getting a Used Car Loan?
#5 Too high a loan amount
Asking for a loan principal that is too high when compared to your repayment capacity is also one of the prime pre-owned car loan rejection reasons. Your lender can only extend a specific loan amount based on your credit history and current income, so make sure you do not go overboard.
For a better road ahead
Now that you know all the reasons why your loan for a second-hand car may have been rejected, the next step is to fix it. The way to do so is to:
- Maintain a strong credit score, preferably 750 or above
- Check your repayment capacity in advance using a used car loan EMI calculator to ensure you do not request an amount that is too high
- Ensure a steady flow of income
- Duly attest and submit all the paperwork the lender has asked for
Are you in shipshape to get your pre-owned car loan? Then, apply with Tata Capital! We offer used car loans for a principal of up to Rs. 50 lakhs with a flexible tenure ranging from 12 to 60 months. With our used car loan interest rates starting at just 15%, there’s no reason to have second thoughts about bringing home your dream car. Connect today!