Top 5 Tips To Increase Car Loan Eligibility

At a glance, buying that dream car does not seem all that hectic. In fact, a vehicle is seen as an unavoidable savior in our already time-crunched schedule. Arrange enough bucks for down payment and a car loan or EMIs will take care of the rest. Apart from banks, there are countless dealers, private financers, and home brands who offer loans. The vehicle dealer too gives you huge discounts and waivers in the final price. Yet there is also the fact that people in need of car loans are facing a grim situation lately. This is because of the stricter car loan eligibility criteria and the fluctuating interest rates. Hence it would be prudent to review your options before deciding on an auto loan.

Here are 5 tips laid out to help you assess and compare your options.

1)Choosing a longer car loan tenure:

This is the oldest and most obvious way to boost your car loan eligibility. Longer duration means a considerable reduction in the monthly payment, which is attributed to increased possibility in repayment. Despite the longer term, percentage of interest and the principal sum will remain the same. Hence you do not end up paying more in the long run.

2)Paying back existing loans:

If you have other unresolved loans such as home loans or business loans, it will negatively impact your vehicle loan eligibility. According to most loan guidelines, if there are more than 10 existing unpaid installments to your name, it is highly likely that your loan application is going to be rejected. This can be reversed if you can pay off even a part of the debt or pre-pay a few months EMIs in advance.

3)Our income vs my income:

Many people hesitate to show the spouses, parents or childrens income for fear of bringing down the eligibility. This is a myth. In fact it works the other way round.

For example- Mr. Sharma applied for a car loan and is eligible for 3 lakhs, based on his income and other existing loans. But the expected loan was 5 lakhs. In this case, he can show the income proof of another family member.

4)Step-up leads to eligibility-up:

Going for a step-up loan is indeed a smart way to enhance eligibility as the initial low EMIS are considered while evaluating eligibility. Here, you pay a reduced EMI in the first half of the loan tenure and in the subsequent years, double your EMIs or increase by atleast 30%. Make use of the car EMI calculators available online to figure this out.


Whether you are a salaried employee or run your own business, please ensure that all the perks such as incentives, annual hikes, promotion, and unexpected profit are clearly mentioned. If you are a regular receiver of on-site work opportunities with attractive remuneration, loan eligibility will be the least of your concerns.

While the above tips are tried and tested, you must be aware of your monthly budget and miscellaneous expenses so that meeting the eligibility norms will not tilt your financial planning.