A used car loan is a type of secured mortgage loan. This loan is provided by many leading banks and NBFCs in India. One can get a used car loan to purchase a second hand/used car. There are many benefits of taking a used car loan. Banks and NBFCs have very particular and strict eligibility criteria to grant a used car loan. Though one may follow the criteria, his/her used car loan application might get rejected. These are the reasons you should be aware of which may cause your used car loan application rejection…
Poor credit score
Banks and NBFCs require a strong credit score of minimum 650 to approve a used car loan. If you have a credit score lower than 650, then your used car loan application will get rejected. So if you do have a low credit score or no score at all, we suggest you to build a strong credit score to get your used car loan approved.
Previous loan defaults
When you apply for a loan and fail to pay it back on time, you are listed as a defaulter by your loan lender. If you apply for a used car loan being a defaulter in the past, your loan application might get rejected. It becomes difficult for the banks and NBFCs to trust you with a loan amount when you already have been unable to pay back one earlier in the past.
Providing misleading information
When you apply for a used car loan, make sure that all the documents which you provide are legal and legitimate. Also the other required information provided by you should not be false. If the loan lender finds out that you have provided illegal or misleading information, then your used car loan application will get rejected. You may also have to face a legal action for doing so.
Multiple current debts
Banks and NBFCs check your current financial obligations and your ability to repay the used car loan before approving it. If you have ongoing multiple loans or credit card outstanding, that means you have too many financial obligations. Banks and NBFCs refuse to provide finances to such customers. So pay back your current debts before applying for a used car loan or your application might get rejected.
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