CIBIL Score for Car Loan

To be eligible for a car loan, you need to fulfil some specific criteria. The general eligibility criteria comprise prerequisites like a minimum age limit of the applicant, a minimum monthly salary, and a good credit history. Good credit corresponds to a good CIBIL score, which is predominantly the deciding factor for the acceptance or rejection of the application for a car loan.

If your CIBIL score is above 600, that's good; however, if the score is 750 or above, it is considered to be more favourable. Talking about the minimum CIBIL score for a car loan, if it's above 750, there is a higher chance of your car loan application getting approved.

When there is no clearly defined minimum CIBIL score limit set for a car loan, it's always favourable to have a high credit score. This can help you get the required loan at favourable terms.

A good CIBIL score for a car loan can be very important when you are looking to take a car on loan. The CIBIL score for a car loan is essential as it affects many factors like:- 

• Helps determine the loan amount: The CIBIL score for a car loan is proof of your creditworthiness, and if you have a good repayment history, you can easily avail a car loan of a more significant amount, while if you have a low CIBIL score, you will face difficulty in getting the desired loan amount.

• Governs the approval or rejection of the car loan application: CIBIL score for a car loan is a measure of your creditworthiness, which helps the lenders to decide whether to approve your loan application or not as it is based on your past repayment behaviour.

• Determines the interest rate: If the applicant has a higher CIBIL score for a car loan, it also reflects that he can hold greater financial responsibility. Therefore, there are chances that the lender would offer you the car loan at a lower interest rate, and you would have the upper hand in negotiating the interest rate. On the contrary, a low CIBIL score for car loans generally poses a risk for the lender; this is why they raise the interest rate.

If you have a good credit score, the bank/lender provides you with better access to special offers, including benefits like low processing charges, zero down payment, etc. Whereas in case of a low credit score, your loan requests can be denied or, if approved, would attract a higher interest rate, the down payments could also be on the higher side.

The following table shows how the CIBIL score affects your car loan approval: