How does a low CIBIL score affect used car loan interest rates and approval chances?

Your CIBIL score can considerably influence your possibility of getting approved for a used car loan as well as the financing rate you will be offered. A CIBIL score is an important indicator of your creditworthiness and is based on your repayment history of loans and credit cards, as well as your overall financial behaviour. As a rule of thumb, the higher the CIBIL score, the better. A CIBIL score above 750 for a responsible borrower is ideal.

If your CIBIL score is below the threshold then the lenders will perceive you as a riskier endeavour. Therefore, you could be offered higher interest rates, making the loan far more costly over the course of the loan timeline. The amount of the loan you can expect to receive will also be reduced, which means you will have to pay a higher deposit from your own funds. It is also common for lenders to request some sort of co-applicant or guarantor for you, in case your credit score is very weak.

When the CIBIL score is at a low point, your loan is very likely to be rejected. To increase your chances of being approved, and receiving a better loan contract, work on improving your CIBIL score before applying. You can achieve this by discharging overdue debts, paying bills timely, and verifying that your credit score is accurate. If you properly check your credit profile beforehand, you can resolve any discrepancies and will be able to put your best foot forward as an applicant for a used car loan.