How to Build Your Credit with a Used Car Loan
07 January, 2025
Synopsis
You may build or improve your credit with a used Car Loan.
Timely loan repayment is key to building your credit.
A strong credit may give you access to favourable future financing options.
A strong credit profile can increase your chances of securing various financing options. However, not everyone enjoys a balanced income-to-debt ratio. But what if there is an easy way to build a good credit profile by securing a used Car Loan? Yes! You heard that right. A used Car Loan can help you build a solid credit profile, especially when struggling with a low credit score. This article answers a vital question, i.e., how you can build a credit score with a used Car Loan.
What is a Credit Builder Loan & How a Used Car Loan Can Be a Credit Builder Loan?
A credit builder loan is a specially designed financial product that helps individuals improve their credit scores. Unlike traditional loans, your loan amount is held in a secured account until full repayment. Regular repayments are reported to credit bureaus, and you get to the opportunity to build a positive credit history. With a used Car Loan, you may be able to build credit as it is a secure loan. The car is used as collateral until you repay the loan.
Credit Scores and How They Impact Loans
A credit score numerically represents your creditworthiness, making it easy for lenders to estimate one's borrowing power. There are multiple credit bureaus in India that determine credit scores for individuals based on their financial history. The math is simple. A higher credit score means you may avail of loans at lower interest rates and favourable terms and vice versa.
Which Credit Score is Used to Buy a Car?
The Reserve Bank of India (RBI) has four credit bureaus registered to evaluate the creditworthiness of a borrower. The lender may use any of the four companies to access your credit. The normal range of credit scores is between 300-900. Anything above 750 is generally considered excellent. Remember, your credit score for a used Car Loan application directly impacts the loan terms, like the interest rate and repayment period.
How to Build Credit with a Used Car Loan?
Here are some tips to follow.
Always Repay on Time: After getting a used Car Loan, make sure you pay your EMIs on or before the due date every month. Your consistency will help boost your credit profile.
Choosing the Right Loan Amount: Multiple delayed or missed repayments can dramatically reduce your credit score. So, always borrow an amount you can comfortably repay in the long term.
Say Yes to a Longer Tenure: When building credit, a longer repayment window means your payments become more manageable, and you're likely better off not missing EMIs.
Keep a tab on your Credit Score: As you repay your used Car Loan, make it a habit to check your credit score regularly. That way, you can see how your credit profile is being built and take necessary measures.
Say Yes to HDFC Bank's Pre-Owned Car Loan To Build Your Credit Profile
Building a good credit score for used Car Loan is easy when you choose a reputable lender. With HDFC Bank's Pre-Owned Car Loan, you can get access to attractive interest rates, flexible repayment options, and smooth disbursal. You can get a 100% loan for a Pre-Owned Car in just 30 minutes.
Click here to get a pre-owned Car Loan today and build a solid credit profile.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit at sole discretion of HDFC Bank Ltd. Other charges and taxes as applicable. The offer is unconditionally cancelable without prior notice. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
