My monthly income is 50,000/- and I have a 1 Lac Home Loan running for which the EMI is 13,700/-. Will I be able to get 5 Lacs car loan in present scenario?"
Given the fact that your salary is Rs. 50,000 and paying nearly 1/4th of it as an EMI, you would still be eligible for a car loan. If you have a good repayment history, stable monthly income and no EMI arrears, you would be eligible for a car loan. However, the amount of loan that you will be eligible for – would differ from bank to bank. With the limited details you have provided, it is difficult to say the exact amount of loan you would be qualified for. But a few banks might offer you 50% to 70% loan amount of the value of the car, a few may even offer you a higher amount for a higher interest rate.
Your eligibility will not only depend on your income, it will also depend on the loan amount you are looking at along with other factors. Here’s a list of factors that are used to determine whether a borrower is eligible for a Car Loan.
Income: Your income levels, present and prospective, determine your loan-repayment capacity. Lenders consider your take-home salary, or the salary that comes to your account after the deductibles, to ascertain your repayment capabilities. The more you earn, the stronger your repayment capacity. This reduces the risk of lending to you and allows lenders to approve larger loan amounts.
Employment: Your employment plays a major role in determining your eligibility. Based on your employment status, lenders broadly classify borrowers as salaried, self-employed, firm, private company, trust, AOP and HUFs. In general, self-employed individuals are considered riskier bets than salaried employees. This is because the income of self-employed individuals may vary from time to time. Salaried individuals, on the other hand, are sure to earn a fixed sum monthly.
Credit Score: Your Credit Score indicates your creditworthiness. It is a number which summarises your credit report. Now, what is your credit report? It is a record of your past credit transactions and financial behaviour. All lenders check your Credit Score before approving your loan application. A good Credit Score, usually of 750 and over, can lead to the speedy approval of your loan (provided you meet all the other eligibility criteria).
Existing Loans: Unless you have strong loan servicing capabilities, outstanding loans reduce your eligibility for a Car Loan. Repaying two or more loans concurrently increases the risk of lending to you. This may prompt lenders to sanction a smaller amount, or reject your application altogether.
Guarantors: Sometimes, the lending institution may ask you to nominate a guarantor for your loan. A guarantor is a person who can sign for the loan along with you and take responsibility for repayments should you fail to do so. This is a requirement that may be implemented at the discretion of the bank. It’s not a mandatory requirement. If you have a weak Credit Score or are lacking in any other criteria, the presence of a guarantor can strengthen your loan prospects.
Age: Age is an important factor that determines your eligibility for a loan. Most institutions, in general, will consider approving loans for individuals between the ages of 21 years and 70 years.
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