A vehicle loan helps you bridge the monetary gap while buying a car. Most banks and non-banking finance companies (NBFCs) offer this type of loan. The entire procedure to apply for the loan is simple and quick.
The loan amount depends on several factors, such as the model, price, and your income. In case you cannot meet the eligibility criteria individually, you may apply for the loan along with a co-borrower.
Is a co-borrower required for a car loan?
A co-borrower or co-applicant means adding another borrower to your car loan application. If your application is approved, the responsibility to pay the EquatedMonthlyInstallments (EMIs) on time lies with both the borrowers.
Having a co-borrower is not mandatory while availing of car finance. However,here are four benefits to include a co-applicant:
- Enhances eligibility
Every lender has different eligibility criteria that you need to fulfill to qualify for a loan. In case, you cannot meet these conditions, including a co-applicant improves your eligibility, enabling you to get the funds and drive your dream car.
- Improves credit score
Your credit score is an important car loan eligibility criterion. Every lender checks this while reviewing your application. A high credit score allows you to benefit from lucrative terms and conditions. However, if you have a low credit score, lenders may not approve your application. A co-borrower is beneficial to improve your chances of obtaining the loan, especially if he has a high credit score.
- Builds credit history
If you are applying for a car loan online for the first time without a previous credit history, you may find it difficult to get finance. Including a co-borrower with a credit history increases the possibility ofyour loan application being approved. Additionally, it helps you build your credit history over a period.
- Helps to avail of better terms
If the co-applicant has a high credit score and a good credit history, you can getmore suitable terms and conditions on your loan application. Lenders may provide a higher loan amount, flexible repayment tenure, or an affordable car loan interest rate.
Before you include a co-borrower on your vehicle loan application, you need to check who is an eligible candidate for this purpose. You may check this information on the Mahindra Finance website and apply for a car loan today.