Car Loan Eligibility

Call it necessity, call it luxury; everyone intends to buy a car, nowadays. Getting a car loan is pretty easy too. It provides you with the money you need to get a car of your choice and the easy installments don’t really get you worked up in the successive months.

The thing to bother about is the increasing interest rates. This factor determines your car loan eligibility. It’s a hefty challenge to meet up with the criteria.

Analysis: There are several conditions that need to be taken care of by an individual before applying for a car loan. The amount sanctioned as loan differs from bank to bank. The prioritized condition is that if the borrower is actually eligible for the loan amount. Other factors which come into play are job stability and age.

These conditions determine the eligibility and the income standardises the loan amount. Since, different banks offer different multiples, you must choose wisely before you decide upon one.

The amount of car loan depends greatly on the actual multiple that the bank charges. Secondly, it also depends on the gross or net amount. The type of amount is decided by the bank after considering the car loan amount. For instance, a salaried person will be eligible for a lesser amount of car loan than a businessman or an entrepreneur.

To understand the ways of increasing your eligibility for a car loan, you must realise the following things:

• Increasing loan tenure: A longer tenure reduces the monthly installments. However, the interest rates and the principal loan amount stay the same. The loan eligibility is greatly enhanced by lower instalment amounts. Thus, to increase loan eligibility, increasing the tenure is a very common practice.
• Repaying loans and improving credit scores: Having a good credit history can really help. Car loan eligibility can be affected if there are cases of outstanding loans associated with you. Paying credit bills within the given period of time can enhance your eligibility scores.
• Pool resources: Adding your income to that of your relatives’ can increase your chances. If you involve other members of your family, like mother, father, spouse, it can help you to apply for larger sums of money as loan.
  Example: Suppose, you can apply for an amount of 5,00,000 INR but your requirement is 10,00,000 INR. If you club your spouse’s income along with that of yours, it would increase your loan eligibility. Calculating, using the loan eligibility calculator for accurate results, is recommended.
• Step-up loan: In this process, you may pay lesser amount of interest during the initial months. As you approach towards the latter half of the tenure, you’ll have to pay increased amounts. The initial months won’t be creating problems for you, financially.
• Advantages: You must calculate the incentives that you are earning too. The variable pay is extremely important and crucial for increasing loan eligibility.

These points will definitely help you increase your car loan eligibility. You must also keep in mind your financial situation when applying for such a loan. Hence, prior planning before applying for a car loan is recommended.