The average credit score of an Indian is 678, but the acceptable range that is considered by banks varies. One can qualify with a lesser score provided he/she opts for alternative options other than traditional lenders like banks. This is because in order to qualify for an auto loan with traditional lenders one have to fall under the category of “low-risk applicant.” This range requires one to have a score that is above 650.
Traditional Lender Requirement:
Traditional lenders, such as huge financing companies and banks require the candidate to fall under the category of fair to good streamline in order to qualify for a loan. The acceptable range is 620-700. In case the applicant does not have the desired score, then the banks will place additional clauses such as huge down payment, co-signatory, etc. In case you fail to get a loan with banks and traditional lenders, then you may have to seek alternative options.
Alternative Lender Requirement:
Alternative lenders include manufacturers and car dealers, dedicated high-risk lenders, etc. Out of all these options, manufacturers can offer the best deal to all those people who have a poor score. The manufacturers, such as Nissan Motor Acceptance Corporation for Nissan vehicles or General Motors Acceptance Corporation for GM vehicles, offer the best deals to the buyers.
Since, they want to sell their product, the interest rate on the borrowed amount is less when compared to other non-traditional money lenders. However, these companies will also not agree to offer loans to people with a score that is less than 620. On the contrary, high-risk lenders will agree to provide a loan under such a situation. However, the interest charged will be too high when compared to others.
Checking your score:
One can opt for a credit report either directly from CIBIL or through third party service providers. One can directly login to CIBIL’s website for the report or get in touch with them through the phone. If you need assistance, then opt for third party services. Once you get your report, you can check your report and analyse the same.
Improving your score:
If your score is too low to qualify for an auto loan, then you may have to take a few steps in order to improve the same. Begin with small things like clearing your credit card balance. Apart from this, delinquencies are yet another thing that ruins your score drastically. Hence, clear all your delinquent accounts before they drop your score significantly.
Finding a Loan:
Once you attained a decent score, you can apply for a loan. If you have attained something above 650, then the banks may offer you a loan at a decent rate of interest. On the contrary, if the score is still around 620, then alternative lenders will offer you an auto loan. Understand the fact that dealers provide competitive rates when compared to banks.