City Union Bank Car Loan Eligibility

A critical action point before applying for a car loan is checking whether you are eligible for a car loan. Different banks have different criteria for car loan eligibility. It is therefore prudent to check the details beforehand to avoid loan rejection.

Some of the points to note regarding the City Union Bank car loan eligibility criteria are:

• Car loan offered by City Union Bank is only for new cars.
• Only those who earn above Rs. 1.5 lacs per annum as a regular income are eligible to apply for this loan
• The bank has capped maximum loan amount at Rs. 5 lacs
• Margin offered is 10%
• The maximum loan tenure is 60 months

The City Union Bank requires the following details as well to process the car loan application:

ID Proof:

• Aadhaar card
• Passport
• PAN
• Voter’s ID
• Driving license
• Ration Card
• ID Card from the employer
• ID card that has been issued by recognized Educational institutions
• Letter from a recognized public authority or a Government officer
• Job card issued by NREGA duly signed by an officer of the State Government
• Letter issued by UIDAI containing details of name, address and Aadhaar number

Address Proof:

• Aadhar card
• Passport
• Driving License
• Voter’s ID
• Telephone bill
• Bank account statement
• Letter from a recognized public authority or Government officer
• Electricity bill
• Ration card'
• Letter from the employer
• Job card issued by NREGA duly signed by an officer of the State Government
• Letter issued by UIDAI containing details of name, address and Aadhaar number
• Consumer Pass book issued by gas agency
• Rent agreement that has been registered with the State Government or a similar registration authority

Additional Documents:

• A demand promissory note
• Loan cum hypothecation agreement
• Quotation from the car dealer

What are the factors impacting the eligibility of a car loan?

While it is easy to apply for a car loan, it is very important to check your car loan eligibility before doing so. This helps in avoiding any hassles in the whole process and reduces your chance of loan rejection. There are many factors that affect the eligibility of a car loan.

Credit score – Your individual credit score is very much considered by the bank before issuing a car loan. This shows your creditworthiness and correct sense of your financial condition. If your credit score is high, it will be easy for you to get a car loan. If your score is low, chances are high that it will get rejected.

Age –  There is a minimum age requirement of 21 years to apply for a car loan with most banks. Also, it is advisable to close the loan payment before 65 years. Banks prefer applicants who have a longer working period, that is, the number of working years are higher as their financial condition will be strong.

Income level – The total loan amount that will be made available to you will depend on your income level. If the income level is lesser than the defined threshold limit, you can include your spouse or any other earning member of your family as a co-applicant. This will support your application strongly and qualify the criteria of your application.

Debt –   The debt-to-income ratio is considered by the bank when you apply for a loan. If you are currently paying off another loan, you should completely close it as it may become a hindrance in getting your car loan. Existing debts must be cleared out as much as possible to increase your chances of getting the loan.

How to improve your eligibility for car loan?

If you are having trouble in meeting the basic eligibility criteria for a car loan, it can be improved in many ways:

Repay existing debts –  You must immediately clear your existing dues or any outstanding payments. This will improve your debt-to-income ratio and increase your eligibility for a car loan. Debt management is crucial when you are seeking financial assistance.

Bring in Co-applicants –   When you need to show a stronger income source, it is wise to include an immediate family member who is earning as a co-applicant in your car loan application. This makes the financial base strong and banks will be convinced of your repayment capabilities. The co-applicant can be your wife, husband, father, mother or siblings. It is not mandatory to buy the car in their name.

Increase your credit score – One of the most important parameters considered by the bank while sanctioning a car loan is the applicant’s credit score. This shows the true picture of the applicant’s financial condition. If you have any pending credit card bill or debts, it must be closed out to better your credit score. It is not suggested to completely discard your card as it will affect your available credit limit for day to day activities. However, it is important to maintain the balance with your revolving debt to gain a good credit score.

FAQs

(1) What is a credit score?

A credit score is calculated based on all your income sources/earnings, debts, outstanding, EMIs to understand the general financial health of your portfolio. This is used by banks to determine loan sanctions to the applicants.

(2) What is the processing fee charged by City Union Bank?

City Union Bank charges 1.25% as processing charges for car loan; a minimum of Rs. 700.

(3) Is there a collateral or a guarantee required for a car loan?

No, if you meet the car loan eligibility criteria laid out by the bank, there is not guarantee required. The car being purchased is the collateral for the loan being taken from the bank.

(4) How can I improve my credit score?

Credit Score is considered very strongly by the bank where you are applying for a car loan. It can be improved by pay off your debts and outstanding, ensuring EMIs are paid on time and credit card bills settled within the required period. These steps will ensure that your credit score will be on the higher side and will help you in getting a car loan easily.