Looking for a car on a tight budget? You may have already considered getting a pre-owned car. If you finance the vehicle using a used car loan, you can get up to 95% of the car’s value and repay the loan in easy monthly instalments.
However, when you apply for a loan, lenders first check your credit or CIBIL score. Since a higher credit score reflects creditworthiness, you can collect benefits aplenty on your loan offer. Yes! Besides getting your loan approved quickly, a good score, ideally above 750, improves your loan eligibility and helps you land a better deal.
So, let’s look at how having a good used car loan credit score is beneficial for you.
Prompt loan approvals
Since a clean repayment track record and a solid credit score attests to responsible credit behaviour, the lender perceives you as a low-risk borrower. This way, your chances of getting loan approval multiply.
Moreover, a good credit score indicates that you’re less likely to default on your repayments. Hence, lenders approve your loan application quickly. This means you get your hands on the disbursed funds faster as well!
Higher loan amounts
The loan amount you get sanctioned depends on your loan eligibility. Here, with a high credit rating, you can bag a bigger loan amount, which means you can choose from a wide range of car models, including hatchbacks, SUVs, premium sedans, etc.
Additional Read: Can You Avail a Used Car Loan If You Have a Low Credit Score?
Lower used car loan interest rates
Did you know you could get a more competitive interest rate on your used car loan offer with a high CIBIL score? Yes! Besides, a higher score not only increases your lenders’ trust but also improves your bargaining privileges. This means you could ask your lender for a lower interest rate, extended tenure, and flexible EMI plans for a comfortable repayment experience.
Relaxed terms and conditions
Along with lower interest rates, being a credible borrower makes you eligible for additional benefits as well. These include perks like flexible loan terms, lower or waived off processing fees, etc., helping you save on overall repayment costs.
Now that you know about the benefits of a good credit score, here are some tips to increase it.
Tips to improve credit scores for used car loan
- Pay your credit bills and loan EMIs on time.
- Maintain a low credit utilization ratio.
- If you are taking multiple loans, ensure you have a mix of secured and unsecured loans.
- Review your credit history routinely to flag any mistakes in the report at the earliest.
By following these tips, you can raise your credit score over time.
Additional Read: What Are the Requirements to Get a Used Car Loan?
A healthy CIBIL score helps get quick approval times, more attractive interest rates, high loan amounts, and relaxed loan terms. Opting for a lender that extends flexible loan terms significantly reduces financial stress when repaying the loan.
With Tata Capital, you can avail of loans with extended tenures and easy EMI options too! Visit our site and use the used car loan EMI calculator to plan your repayments today!