CIBIL Score for Car Loan

Maintaining a high CIBIL score is equally important, whether it is to be used for a home loan, personal loan or car loan. A good CIBIL score for car loan can help in lowering the interest rate from leading banks/NBFCs, as it depicts your creditworthiness and responsible credit behaviour.

In the case of individual borrowers, a high credit score is essential to be approved for a car loan, as well as any other type of loan. The following sections discuss key aspects regarding how to achieve and maintain a good CIBIL score for a car loan.

Relevance of Good CIBIL Score for Car Loan

Your CIBIL report, also called the Credit Information Report (CIR), is generated based on the repayment tenure and handling of loans and credit cards in the past. Your CIBIL score sums up how well you have previously handled credit by assigning a number between 300 and 900.

A good CIBIL score should be as close to 900 and at least 750 and above. Simply put, the higher your score, the higher your chances of getting a car loan approved, whether for the purchase of a new car or a used car.

But a good credit score will not only improve your chances of being approved for a car loan but can also provide you better access to special offers. Such offers can include 100% car financing i.e. zero downpayment, lower than usual processing fees, special low interest rates, etc.

Also Know: What are the Factors that Affect your CIBIL score?

While a good CIBIL score is desirable to avail a car loan easily, a comparatively low CIBIL score, such as 650 or below, does not automatically make you ineligible for a car loan.

There is no minimum CIBIL score for car loan criteria as defined by lending institutions. However, a low score can typically result in car loan offers that have a higher interest rate or a higher down payment requirement.

How to Check CIBIL Score to Apply for a Car Loan

Following is the step-by-step procedure to check CIBIL score before you apply for a car loan:

Step 1: Click here to check your CIBIL score

Step 2: Provide basic details such as name, mobile number, PAN and other relevant details

Step 3: Once you submit the application, you will see your credit score for free on the screen followed by a detailed credit report

Step 4: You can also download the detailed credit report with important insights and tips (paid)

Can I Get a Car Loan with a Low CIBIL Score or No Credit History?

While having a good credit score improves your chances of getting a car loan approved, a comparatively low credit score or having no credit history (i.e. no prior loans/credit cards) does not make you ineligible for a car loan.

Please note that no credit history (denoted by NH/NA on a credit report) typically means that you have never had any loans or credit cards in the past. In such cases, lenders typically consider the following factors to determine your eligibility for a car loan:

• Income: Your chances of approval will increase if you have a stable source of income that can support the payment of monthly loan instalments. Typically, salary slips, Form 16, profit and loss statements, etc., need to be submitted to the lender as income-proof documents
• Loan Amount: A low credit score is indicative of a higher risk of default for a car loan as compared to an applicant with a high score. Thus, you may decide to request a lower car loan amount and choose a higher down payment option to increase your chances of car loan approval.
• Co-applicant/Guarantor: Apply with a co-applicant who has a better credit score and a more stable source of income. You may also consider getting a guarantor so that the lender can trust not just your repayment capability but also your guarantor when approving the loan.

In case you have a low score, you can follow a disciplined credit behaviour for a few month to improve your CIBIL score for car loan approval.

CIBIL Score for Car Loan FAQs

Q. How can I improve my credit score to get a car loan approved?

Ans. You can improve your credit score by:

• Making timely payment of loan EMIs and credit card dues,
• Maintaining a low credit utilisation ratio, and
• Avoiding multiple loan applications

You can also seek the assistance of Credit+ advisory services from Paisabazaar to improve and maintain a high credit score.

Q. Can I get a car loan with a low CIBIL score?

Ans. Yes, a car loan without a CIBIL score or a low CIBIL score is still an available option for customers. However, you should prove to the lender that you have a stable source of income and you may also have to arrange for a guarantor or settle for a lower loan amount.

Q. Can I check my CIBIL score for free on the TransUnion CIBIL website?

Ans. Yes, you can check your CIBIL report, which contains your CIBIL score for free once a year, directly from TransUnion CIBIL. However, you may have to purchase their subscription plan for regular reports. Here, you can check your credit score for free and receive monthly updates.

Q. What should I do, if there is an error in my CIBIL report?

Ans. You should raise an online dispute with CIBIL when there is a error in your report. Login to myCIBIL and navigate to Credit Reports > Dispute Center > Dispute an Item. This process is known as raising a CIBIL dispute.

Q. Is the CIBIL score also important for a car loan intended to purchase a used car?

Ans. Lenders tend to use your CIBIL score as the first check to assess your creditworthiness, and hence CIBIL score is important for both new and used car loans.

Q. Can the CIBIL score affect the interest rate on the car loan?

Ans. Yes, the CIBIL score can affect the interest rate of the car loan. Generally, a high credit score translates to a lower preferential interest rate on a car loan. Credit scores for car loans should be maintained high to have negotiation power and to avail added benefits.

Q. How can I check the status of a dispute raised online at CIBIL?

Ans. CIBIL sends weekly email notifications to convey the status of the dispute.

Q. How will I know if my CIBIL score for car loan is sufficient or not?

Ans. Ideally, you should maintain a CIBIL score of 750 and above to get your car loan application approved at low cost of credit. However, your car loan application depends on numerous other factors as well that needs to be fulfilled for approval.

Q. How does CIBIL prepare a credit report and score?

Ans. TransUnion CIBIL prepares your credit report and score based on the data collected from its member credit institutions, which include banks and NBFCs all over India.

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Also Read:

• What is a Credit Report? Steps to Download Credit Score Report
• What are the 10 best ways to build up my credit score?
• No Credit History? Here’s How You Can Build One
• CIBIL Commercial Report & CIBIL Rank
• Check Free CIBIL Score For SBI Loans
• CIBIL Score For Personal Loan
• CIBIL Vs Experian Vs Equifax Vs Highmark
• Common Myths About Credit Score