How to get Car Loan for CIBIL Defaulters

Getting a car loan when you have a history of defaulting on payments can be challenging, especially if your credit score (CIBIL score in India) has been affected. However, it’s not impossible. Here’s a guide on how to approach getting a car loan as a CIBIL defaulter from The Loan Details Team.

Assess Your Credit Situation

First of all, Start by obtaining a copy of your credit report from CIBIL or any other credit bureau. Review it thoroughly to understand the extent of the defaults and any other negative marks on your credit history.

Understand Lender Requirements

Different lenders have varying criteria for approving car loans. Some may be more lenient towards borrowers with past defaults than others. Research lenders who specialize in offering loans to individuals with poor credit scores or past defaults.

Improve Your Credit Score

While this may not yield immediate results, taking steps to improve your credit score can help you qualify for better loan terms in the future. Make timely payments on any existing loans or credit cards, reduce outstanding debt, and avoid taking on new debt.

Provide a Larger Down Payment

Offering a substantial down payment can demonstrate your commitment to the loan and reduce the risk for the lender. It also reduces the amount you need to borrow, which may increase your chances of approval.

Offer Collateral or Security

If possible, provide collateral or security for the loan. This could be in the form of another asset, such as property or a savings account, that the lender can use to recover their money in case of default.

Seek a Co-Signer

A co-signer with a good credit history can strengthen your loan application. The co-signer agrees to take responsibility for the loan if you default, providing assurance to the lender.

Consider Alternative Lenders

Explore options beyond traditional banks and credit unions. Some online lenders or specialized finance companies may be more willing to work with borrowers with past credit issues.

Be Realistic About Loan Terms

Understand that as a defaulter, you may not qualify for the most favorable loan terms, such as low-interest rates or long repayment periods. Be prepared to accept higher interest rates and shorter loan terms

Review and Compare Offers Carefully

Before accepting any loan offer, review the terms and conditions carefully. Compare offers from multiple lenders to ensure you’re getting the best possible deal given your circumstances.

Stay Committed to Financial Responsibility

  1. Once you secure a car loan, make timely payments and manage your finances responsibly to rebuild your credit over time.

Remember that getting a car loan as a CIBIL defaulter may require patience and persistence. It’s essential to demonstrate to lenders that you’re committed to improving your financial situation and can be trusted to repay the loan.

Things To Do When You Buy A Car On Loan

Buying a car on loan involves several steps. Here is a step-by-step guide to help you navigate the process:

1. Determine Your Budget:

  • Understand how much you can afford to spend on a car. Consider factors such as your income, monthly expenses, and other financial obligations.

2. Check Your Credit Score:

  • Obtain your credit score. A higher credit score may help you qualify for lower interest rates. If your credit score is low, consider improving it before applying for a loan.

3. Research Loan Options:

  • Explore loan options from various sources, including banks, credit unions, and online lenders. Compare interest rates, loan terms, and eligibility criteria.

4. Calculate Loan Amount and Down Payment:

  • Determine the total amount you need to borrow. Consider making a down payment to reduce the loan amount and lower monthly payments.

5. Pre-Approval:

  • Consider getting pre-approved for a car loan. Pre-approval provides an estimate of the loan amount you may qualify for and can be useful when negotiating with dealerships.

6. Research Cars:

  • Research different car models based on your preferences, needs, and budget. Consider factors like fuel efficiency, maintenance costs, and resale value.

7. Visit Dealerships:

  • Visit dealerships to test drive cars and gather information. Discuss financing options with the dealership, but be prepared to compare these with external loan offers.

8. Choose a Car:

  • Once you’ve selected a car, negotiate the price with the dealership. Be aware of additional costs such as taxes, registration fees, and insurance.

9. Complete the Loan Application:

  • If you haven’t pre-approved, complete the loan application with your chosen lender. Provide necessary documents, including proof of identity, income statements, and address proof.

10. Loan Approval:

  • The lender will review your application, credit history, and documentation. If approved, you’ll receive a loan offer with terms and conditions.
  • Carefully review the loan agreement, including interest rates, repayment terms, and any fees. Ensure you understand all terms before signing.
  • Once the loan is approved, the lender will disburse the funds to the dealership or seller. Complete the necessary paperwork to transfer ownership.
  • Arrange for car insurance before taking possession of the vehicle. Many lenders require comprehensive insurance coverage.
  • Make monthly loan payments on time. Consider setting up automatic payments to avoid late fees.
  • Keep up with regular car maintenance to ensure the vehicle’s longevity and protect your investment.
  • Making timely loan payments can positively impact your credit score. This, in turn, can help you secure better financing terms in the future.

Always remember to read the fine print, ask questions, and seek clarification on any terms you don’t understand. Each lender may have its own application process, so be sure to follow the specific instructions provided by your chosen financial institution. Additionally, stay informed about the latest interest rates and loan offerings to make the most informed decision.

What is Commercial Vehicle Loan?

A Commercial Vehicle Loan is a secured loan that assists you in purchasing any commercial vehicle essential for your transport business.

Are your looking to purchase passenger car cab or taxi and earn with companies like OLA, Uber? Do have plans to start or expand your goods transport vehicles fleet of trucks, tankers, Buses? Then, you have come to the right place. Here you will get all the loan details in one place.

How many types of commercial vehicle loans are there?

  • New
  • Used/ refinance/ re-purchase finance
  • Balance transfer
  • Top-up loans

Which type of Vehicle you can purchase?

Get commercial vehicle finance on wide range of vehicles – ranging from 1.5-tonne to 49-tonne GVW (Gross Vehicle Weight):

Cab- Passanger Car- 5/7 seater

Buses

  • Intracity
  • Intercity
  • School and college bus
  • Staff bus

Trucks

  • Small truck
  • Light truck
  • Medium truck
  • Heavy truck
  • Customised truck

Tankers

  • Milk tanker
  • Water tanker
  • Oil tanker
  • Chemical tanker
  • Petroleum tanker
  • Gas tanker

Tippers

Transit mixers

Tempos

Which manufacturer is your best for you?

Purchase your commercial vehicle from some of the best Indian automobile companies

  • Tata Motors
  • Eicher Motors
  • Volvo
  • Mahindra Navistar
  • MAN
  • AMW
  • Mahindra & Mahindra
  • Swaraj Mazda
  • Bajaj Tempo
  • Ashok Leyland

Who Can Avail Commercial Car Loans?

Banks and other lenders offer commercial car loan to a broad array of customers to meet their business needs. In other words, this type of vehicle loan can be availed by various segments of customers having diverse profiles. Here is the list of the consumers considered to be eligible for this loan:

  • Individuals
  • First-time users and buyers
  • Small, medium and large-sized fleet owners
  • Proprietorship firms and Partnership firms
  • Public Limited & Private Limited Companies
  • Trusts and societies
  • Schools and colleges
  • Captive customers and transporters

Salaried and self-employed individuals can co-apply for a commercial vehicle loan with blood relatives or family members. On the other hand, the partners in partnership firms and the directors in private limited companies can jointly apply for this loan.

Benefits of a Commercial Vehicle Loan

Commercial vehicle loan stands out to be the most preferred option for borrowers who are either intending to buy their first commercial vehicle or planning to add a new vehicle to their existing fleet of commercial vehicles due to the plethora of benefits that it offers.  Some of the main features of commercial vehicle loans are mentioned below:

  • Flexible Repayment Tenure: Usually, the repayment tenure offered in commercial car loan is up to 5 years. This ensures low EMI amount to the borrowers enabling them to pay off the EMIs without any undue financial burden.
  • Multiple Vehicle Financing: Whether you are an individual borrower or a fleet owner, you can get finance for a variety of vehicles such as tippers, trucks, buses, trailers, tankers, and other small and light commercial vehicles to grow your business.
  • Easy Processing: The process of applying for a commercial vehicle loan is easy, fast and convenient. After the submission of all the required documents, banks usually take 4-5 days to process a new or used vehicle loan application.
  • Simple Documentation: Commercial vehicle loans come with a hassle-free and quick documentation process. The users can easily upload all the mandated documents online without visiting the bank directly.
  • No Credit-Score Compulsion: Unlikely other loans, commercial vehicle loans don’t require any existing credit score. Borrowers having low or even zero credit score can avail a commercial vehicle loan with ease.
  • Caters to Multiple Needs: The loan schemes are designed to cater to the borrowers’ diverse requirements including new and used vehicle financing, top up on existing loan and refinancing of loans/vehicles for working capital.
  • Customised Solutions: In order to meet the specific requirements of the customers, every commercial vehicle loan scheme is customised according to the vehicle type, loan duration and financial ability of each individual borrower.

How to apply for used car loan?

Used car loans are provided at attractive interest rates and come with a repayment tenure of up to 7 years. Certain lenders provide loans of up to 100% of the car’s value. Most banks and NBFCs provide used car loans. Self-employed individuals and salaried employees can avail themselves of a used car loan.

Buying a used car is often a better value because they’re cheaper, and you can avoid the big depreciation hit that comes with driving a new car off the lot. However, arranging the financing for a used car is a very different story.

Used car loans typically come with higher interest rates and have more restrictions on the type of car you can buy compared to new car loans. But there are still good options. we’ve compiled the best used car loan companies, based on rates, terms, and fees, to help you find the right loan for your vehicle. 

Features of Used Car Loan

Loan Amount

  • Get between 3 to 6 times your yearly income
  • Borrow up to 100% of the value of the car
  • Maximum loan tenure of 60 months
  • Age of Car at loan maturity up to 10 years

Flexible Repayment Tenure

These loans come with a flexible repayment tenures from 12 months to 84 months. However it varies lender to lender

Loan without income document

You can easily Get 80% to 85% of the value of the car as loan amount for 3-5 years without income proof. Here your car is itself an asset for lenders.

Used Car Loan Eligibility Criteria

The following people are eligible to apply for a used Car Loan:

Salaried Individuals:

  • This includes doctors, CAs, employees of private limited companies, employees from public sector undertakings, including central, state and local bodies
  • Individuals who are a minimum of 21 years of age at the time of applying for the loan, and no older than 60 at the end of the loan tenure
  • Individuals who have had a job for at least 2 years, with a minimum of 1 year with the current employer
  • Those who earn a minimum of Rs. 2,50,000 per year, including the income of the spouse

Self Employed Individuals:

  • This includes self-employed sole proprietors in the business of manufacturing, trading or services
  • Individuals who are a minimum of 25 years of age at the time of applying for the loan, and no older than 65 at the end of the loan tenure
  • Those who have been in business for a minimum of 3 years
  • Should earn at least Rs. 2,50,000 per annum

You may choose to apply with many lenders.

HDFC- Click e