What is the Minimum Credit Score to Get a Car Loan?

A great amount of thought goes into buying a car that is just right for you. It only makes sense that the aspects involved in buying a car complement the process and help you make the right decision, instead of disturbing your hard work.

One such aspect which very often becomes a worry for many car buyers is the concept of credit score and how it affects the car loan process. A good credit score for a car loan is not only a necessity in terms of eligibility but it also affects the terms of loan, impacting approval times, EMIs and rate of interest. Hence, it is in the interest of a car buyer to understand how credit score affects their car loan and find out the minimum credit score for car finance, if any.

What is a credit score?

A person’s creditworthiness is defined by his/her credit score. In simple terms, it measures a person’s ability to repay a borrowed amount, be it through a loan, credit card or any other line of credit, and is usually expressed as a number between 300 and 900. The higher the score for a person, the better the person looks to potential lenders and the better the chances for him/her to secure a car loan.

Minimum Credit Score for Car Finance

While usually there is no minimum credit score to get a car loan as it varies from person to person and their past credit history as well as performance, a score below 600 is considered low and usually unfavourable to give a loan. Going by the industry standards, a score upwards of 600 can be considered as a good credit score for a car loan, and that above 750 as highly favourable. You can calculate your credit score and eligibility to receive a car loan using an online score calculator or a car loan eligibility calculator.

How does credit score impact car loan application?

While it is possible for you to get approved with even the minimum credit score for car finance, having one with a high score and good credit history has several positive impacts on your car finance process.

• Faster Approval

Once lenders are able to establish the fact that you have a good repayment history and are highly unlikely to default on your repayments, your car loan application will be approved faster in most cases.

• Loan Amount

Since a low credit score indicates a higher risk of payment defaults, applicants with higher credit scores are more likely to get approval for a higher loan amount, as much as 80%-85%. Conversely, lower credits scores attract strict scrutiny and lower loan amounts, leading to higher down payments.

• Interest Rate

For an applicant with a lower credit score, banks and financial lenders are known to charge higher interest rates, as compared to applicants with higher credit scores. Further, an increased interest rate directly impacts the applicant’s total payout, resulting in higher expenses.

How to avoid a poor credit score?

A good credit score requires consistent efforts and maintenance. Here are some points to keep in mind if you wish to attain a minimum credit score to get a car loan:

• Timely repayment of credit card payments and loans is a must. Even a single missed payment can have an impact on your credit score. Defaults in payments get recorded in the credit history and can affect the credit score for a long time

• Another factor that has a positive impact on your credit score is not utilizing the entire credit limit that you are entitled to, and showcasing a behaviour that suggests controlled spending. You should also not have multiple loans to your name as it points to mismanagement of finances

• If you face loan rejection, do not apply for a fresh one immediately. Rather focus on improving your credit score first and then consider making a new application

Buy your car with Maruti Suzuki Smart Finance

The simplest way to finance your favourite NEXA car is through Maruti Suzuki Smart Finance. Unlike the traditional process, Maruti Suzuki Smart Finance lets you select your desired NEXA car, choose a relevant financier and finance your car hassle-free in 4 simple steps.

Maruti Suzuki Smart Finance offers exciting benefits such as:

• Multiple Financiers

• Digital Document Upload and Verification

• Live Loan Status Tracking

• Complete Transparency on Fees and Charges

• Pre-Approved and Custom Generated Loan Offers

This one-stop solution from Maruti Suzuki also lets you calculate your estimated EMI in 4 simple steps so that you can prepare your finances better and bring home your desired NEXA car hassle-free.

Check out the range of NEXA cars to find the one that you like and bring it home with Maruti Suzuki Smart Finance.