If you are planning to buy your dream car and need a loan for it, this news is for you. Applying for a pre-approved car loan before purchasing a car can make the process much easier. To do this, you will need to make some special preparations. A car loan is a financial agreement that allows you to borrow money to buy a vehicle, which you repay with interest over time. Car loans usually come with low interest rates. Some banks even offer loans that cover up to 100% of the on-road price of the car. In this article, we will share the steps to get quick approval and own your dream car.
Steps to Get a Car Loan Quickly
1. Check Your Credit Report
Before applying for a car loan, check your credit report to understand your credit score. A score of 750 or above can help you secure a loan with a lower interest rate. If your credit report shows defaults or a low score, your application may be rejected.
2. Maintain a Manageable Debt-to-Income Ratio
To qualify for a car loan, you need a minimum monthly pre-tax income and a manageable debt-to-income ratio. While you can’t always change your income, you can improve your debt-to-income ratio by repaying any outstanding credit card loans.
3. Pay Bills on Time
A good credit profile is essential. Ensure that you pay your bills on time, ideally for at least 6 months before applying for a loan. This assures the bank that you will also make your car loan repayments (EMIs) on time, which increases your chances of loan approval.
4. Compare Car Loan Interest Rates
Different banks and car financing companies offer varying interest rates. To find the best deal for you, compare the interest rates and loan terms from multiple sources before applying.
5. Borrow Only What You Need
When applying for a car loan, it’s better to borrow the least amount possible. This can be done by making a smaller down payment and choosing a car within your budget. A smaller loan amount means lower EMIs, a shorter loan tenure, and less interest paid overall.
6. Choose a Loan Scheme You Can Afford
Your loan repayment capacity is crucial for approval. Choose a loan scheme with the lowest interest rate and the shortest tenure that fits your budget. Avoid long-term loans with low EMIs, as they can lead to higher overall costs.
7. Ensure Full-Cover Insurance
Banks and NBFCs want to avoid any losses. Before sanctioning your car loan, make sure you have full-cover insurance for the vehicle. This helps recover the remaining loan amount in case of an accident where you may be at fault.