Best Car Financing Options with Good Credit Score
The post-pandemic world demands to follow social distancing norms. Keeping a minimum of 3ft of distance at all times especially when you are travelling by public transport is impossible hence; having your personal vehicle has become the need of the hour. Buying a car isn’t the only option for owning a vehicle anymore. Like leasing and subscribing to a car does have cons regarding the freedom of use hence even now, most of the population prefers buying a car over other options.
A car is the second most expensive investment in a family and it can get pretty expensive sometimes. For a family with regular monthly income, collecting such a huge amount can become extremely difficult. Car financing that guarantees easy loans for your vehicle can provide the essential amount and regular monthly repayments. But there are some factors to consider before availing a car financing scheme.
Good Credit Score
The first thing a bank or financing firm will enquire about is your credit score. A credit score is Credit Information Bureau India Limited is also called the CIBIL score. A credit score is determined based on an individual's credit utilization, payment history, type of credit and the repayment capability. Ideally, a score of 700 and above is considered a good credit score for availing the car loan. But a credit score above 600 can also be sufficient for car loans if you are ready to pay higher interest rates. In short, the lower the credit score, the more you will be charged.
Below are a few car finance options for you to choose from:
Banks usually offer the best car interest rates but in India, they do demand a good credit score and credit history. Most banks have secure car loan procedures. Doing thorough research on selecting the loan scheme of your choice is essential. Make sure you have the required documents before applying for the loan.
Here are some of the best options at lower interest rates for a credit score above 700.
Non-Banking Financial Companies (NBFC)
The non-banking financial companies do not demand a very high credit score but they do not reward customers with better score either. Usually, NBFCs cater to borrowers whom a bank would not accept for a loan due to low credit scores. Hence, NBFCs charge higher interest rates along with the high cost of funds compared to banks as they price their loans for the higher risk they are taking. So if you have a good credit score it's better to go for banks instead of non-banking sectors.
Due to the design of ‘unsecured loans’, which have different rates of interest of every bank for every customer, it's recommended to opt for a loan from a bank if you have a good credit score and require higher funds.
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