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How to improve your chances of getting approved for a used car loan

chances of getting approved for a used car loan

Read on to learn the key strategies that can significantly increase your chances of securing a used car loan.

Purchasing a used car can be a practical and cost-effective option for many individuals, considering the decreased cost after depreciation. While this is a budget-friendly option, it doesn’t dilute the need for a large amount of funds. You can, however, choose a used car loan to divide the cost of the vehicle into manageable EMIs. One of the top NBFCs, Bajaj Finance Limited, provides used car loans with simple eligibility criteria.

Receiving approval for a used car loan is an important step in this procedure. Lenders evaluate loan applications based on a variety of factors, therefore understanding how to boost your chances of approval can greatly improve your chances of getting one.

Here are four effective strategies to increase your likelihood of securing a used car loan approval:

  • Check and improve your credit score

Assessing your credit score is one of the most important procedures in acquiring a used car loan. This three-digit number gives lenders information about your creditworthiness. A higher credit score reflects responsible financial behaviour, which can increase your chances of loan approval. It is advisable to take proactive steps to improve your credit score if it is lower than 720. This could involve repaying outstanding bills, making on-time payments, and reducing credit card outstanding balances. You’ll make a stronger case to potential lenders if you show a dedication to prudent financial management.

  • Set a realistic budget

It is critical to create a realistic budget before applying for a used car loan. This entails evaluating your current financial status, considering your monthly income, current expenses, and potential car-related costs (insurance, maintenance, fuel, and so on). Borrowers who exhibit an accurate understanding of their financial capabilities and can confidently repay the loan are valued by lenders. You’ll be able to narrow down your car selections and demonstrate to lenders that you’re making an informed decision if you have a well-defined budget.

  • Explore different loan options

When it comes to used car loans, different lenders have different eligibility criteria and terms. It is critical that you explore several possibilities and shop around for the best deal. You must look into numerous banks and NBFCs to identify the one that gives the best terms based on your creditworthiness. Take note of the interest rates, loan tenures, and any additional fees associated with taking the loan. Consideration and comparison can help you spend a lower amount on the EMI.

  • Opt for a shorter tenure

Longer loan tenures may sound enticing due to lower EMIs, but it is critical to remember that they may be accompanied by a higher used car loan interest rate payable. Shorter loan terms can result in significant reduction in interest in the long run. With a shorter loan tenure even if the monthly payments are higher, the overall cost of the loan is lower.

  • Avail pre-approved offers

Check to see whether you have a pre-approved offer from a lender with whom you already have a relationship. Existing customers of several banks and financial organisations can get pre-approved loan deals. By exploring this option, you may be able to obtain a used car loan with favourable terms. A pre-approved offer usually requires minimal documentation. It saves you time while also assisting you in negotiating competitive interest rates with lenders.

Taking these steps can assist you in increasing your chances of loan approval. Bajaj Finance provides used car loans with a high-value credit of up to Rs. 77 lakh, which is an excellent way to fund the purchase of your second hand car. You can acquire asset-based financing for up to 100% of the car’s value with this loan. Customers can also benefit from flexible loan tenures ranging from 12 to 72 months.

Visit the Bajaj Finserv website to apply for a used car loan today.

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