If your CIBIL score is low, your ability to lease a car would certainly be affected.
This is because a low CIBIL score shows a higher risk for the banks, thus rendering it difficult to secure financing or lease agreements. Although the concept of car leasing is from US; it has lately picked up in India as well and there are now a number of agencies here which give the option of car leasing to those who want to rent a car for a long term instead of buying it.
At the time of leasing a car just like for the process of issuing a credit card, the leasing company tends to check CIBIL score as part of the approval process. A low CIBIL score could lead to rejection of lease application or approval with unfavourable terms such as higher interest rates or a larger security deposit.
However, some leasing companies or dealerships could be more lenient and willing to work with individuals with lower credit scores, especially if you can provide additional documentation or evidence of your ability to make timely payments, such as proof of steady income or a co-signer with a good credit score.
It’s vital to ask around and explore different options to see if any companies are willing to work with you despite your low CIBIL score.
Additionally, taking steps to improve your credit score over time can increase your chances of securing favourable leasing terms in the future.
This entails making timely payments on existing debts, reducing outstanding balances, and avoiding new credit inquiries.
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So, these are the key points to remember when you want to lease a car with a low credit score.
Follow these points in case of low credit score:
1. There are some dealership which could be more lenient, so you should explore such entities in case of low credit score.
2. It is vital to ask around and explore available options for persons with low credit score.
3. You should make efforts to improve your credit score over a period of time. This could drastically improve the chances of securing favourable leasing terms.
Frequently Asked Questions:
Does being a guarantor to loan impact the CIBIL score?
It doesn’t impact your CIBIL score directly but it could impact your score when the debt burden is passed on to the guarantor.
In case primary borrower defaults, does guarantor have to bear the liability?
Yes, the responsibility to repay the loan falls on the guarantor.
Does it impact your ability to raise loan?
Generally, it impacts your ability to raise loan when the guaranteed loan is substantial.
Is it advisable to take loan from one credit option only?
No, it is advisable to spread across multiple options such as credit card, personal loan, car loan, so on and so forth.
How does regular payment towards credit card impact your credit score?
Making timely payments and keeping credit card balances low relative to your credit limit can have a positive effect on your score.
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Published: 09 Apr 2024, 08:27 AM IST