Last updated 12 Nov 2026
You can sometimes get a car loan with a low credit score, but expect a smaller loan, a larger down payment, a higher cost or a request for a co-applicant. Lenders see a low score as a sign that earlier payments were late or that you hold a lot of credit. You cannot buy a better score, but you can improve your file, choose a cheaper car and apply only where you are likely to qualify.
This guide explains what lenders look at, what you can do before applying, what to do if you are turned down, and which offers deserve suspicion. It uses the phrase credit score for the number from a credit bureau such as CIBIL or any other of the four bureaus in India. Each lender sets its own cut-offs, so we do not quote one.
What a lender sees
A lender reads your credit report and your income papers. Besides the score, it looks at payment history, how much of your card limits you use, how many loans you have, the age of your accounts and recent enquiries. See credit score, credit utilisation and repayment history.
What lenders weigh
| Factor | Why it matters for a car loan | What helps |
|---|---|---|
| Payment history | Late or missed EMIs and card dues weigh heavily | A run of on-time payments over months |
| Credit utilisation | High card balances suggest strain | Pay balances down before applying |
| Number of loans | Many loans raise your obligations | Close small loans if you can |
| Recent enquiries | Many applications in a short time can lower your score | Apply to fewer lenders, chosen with care |
| Income and FOIR | A steady income can offset a weak score | Show full income proof |
| Down payment | More of your own money lowers the lender's risk | Offer a larger down payment |
| Co-applicant | A strong second income can support the file | Add an earning family member |
Steps to take before you apply
- Get your credit report from a bureau and read every line. Dispute any entry that is wrong.
- Pay overdue amounts and bring card balances down.
- Do not apply to many lenders at once. Each application can add an enquiry.
- Gather income proof: salary slips, bank statements, tax returns.
- Decide on a car you can afford with a larger down payment.
- Consider a co-applicant whose income and record are strong.
- Wait a few months of clean repayment if your file is weak right now.
Checking your own score does not lower it. Our credit score guide explains the basics.
How LOANZ 360 can help
We compare your details with each partner lender's published eligibility criteria before any application goes to a lender, so you apply only where you are likely to qualify. This helps avoid unnecessary credit enquiries; too many lender checks in a short time can lower your score. Our team prepares a credit assessment summary before the file reaches a lender. You then choose where to apply, and the lender decides.
Worked example
A salaried driver earns ₹40,000 a month and wants a car costing ₹8,00,000. His credit history shows two late card payments last year. A lender may offer less than the full amount, ask for a bigger down payment, or ask for a co-applicant. If he puts down ₹3,00,000 and borrows ₹5,00,000, the lender's risk falls and the EMI stays lower. If his spouse, who has a clean record and her own income, joins as a co-applicant, the file may look stronger. He should compare the cost on the APR, not only the EMI.
Options to consider
Ways to improve your chances
| Option | What it means | Watch out for |
|---|---|---|
| Smaller loan, larger down payment | You borrow less | You need savings |
| Co-applicant | A second income supports the file | The co-applicant is equally liable for repayment |
| Used car | A lower price means a smaller loan | Lenders limit the age of the vehicle; see used car loan |
| Lender willing to look at income | Some lenders weigh income and the car more | Cost may be higher; check the APR |
| Wait and rebuild | A few months of clean payments help | You delay the purchase |
Traps to avoid
- Anyone who promises to "clean" or "repair" your credit report for a fee. Accurate negative entries stay for the period the bureaus keep them, and only the lender or bureau can correct errors, which you can request yourself.
- Offers that ask you to pay a fee before the loan is sanctioned.
- A rate or fee you cannot see in writing. Ask for the Key Fact Statement.
- Loans paid to anyone other than the dealer or your own account.
- Stretching the tenure so far that the EMI looks small but the total cost is high.
- Signing blank papers or cheques.
If you are turned down
Ask the lender for the reason, fix what you can, and wait before you apply again, since repeated applications can lower your score. You can also see business and personal loan rejection reasons for how lenders think. A smaller or used car may work next time.
Frequently asked questions
What credit score do I need for a car loan?
Lenders set their own limits and may also weigh income, down payment and the car. A higher score helps, but a lower one does not always mean refusal. Ask the lender about its criteria.
Will a co-applicant help?
A co-applicant with steady income and a clean record can strengthen the file. Both are equally responsible for repayment, so choose carefully.
Does checking my own score hurt it?
No. Checking your own score does not lower it. A lender's check as part of an application is recorded as an enquiry.
Can I improve my score quickly?
Paying down card balances and clearing overdue amounts can help over a period of weeks to months. No one can raise it overnight, and you should avoid anyone who says they can.
Is a used car easier to finance with a low score?
The smaller loan can help, but lenders also look at the age of the car and the borrower's record. Compare used and new offers on the APR.
Should I accept the first offer I get?
Not without comparing. A weaker score can lead to higher costs, so compare the APR and charges across offers before you accept.
Related reading: New car loan, Used car loan, Credit score guide, Car loan checklist, Co-applicant vs guarantor, Glossary: credit score, Glossary: hard enquiry, Eligibility calculator.
See New Car Loan Ask an advisor about it