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What Credit Score Do You Need for a Car Loan in India?

Updated: Jul 2

Owning a car is a dream for many individuals in India, and car loans make this dream a reality by providing the necessary financing. However, before applying for a car loan, it's crucial to understand the importance of your credit score and how it affects your loan eligibility and terms. In this comprehensive guide, we'll explore the minimum credit score required for a car loan in India and how to improve your score to secure the best possible deal.

Understanding Credit Scores in India

In India, credit scores are primarily determined by the Credit Information Bureau (India) Limited (CIBIL), one of the four authorized credit bureaus. CIBIL scores range from 300 to 900, with a higher score indicating a lower risk of default. Lenders use these scores to assess an individual's creditworthiness and determine the terms of a car loan, such as the interest rate and loan amount.

Minimum Credit Score for a Car Loan in India

While there is no universally accepted minimum credit score for a car loan in India, most lenders prefer applicants with a CIBIL score of 750 or above. A score in this range is considered "good" and indicates a strong credit history and responsible borrowing behavior.However, it's important to note that some lenders may consider applicants with lower scores, but they may be subject to higher interest rates or stricter loan terms. For example, a score between 600 and 750 may still qualify for a car loan, but the interest rate may be higher compared to those with scores above 750.

Factors Affecting Car Loan Eligibility

While your credit score is a significant factor in determining your car loan eligibility, lenders also consider other factors, such as:

  • Income: Lenders prefer applicants with a stable source of income, as it demonstrates their ability to make timely loan repayments.

  • Employment status: Salaried individuals may have an advantage over self-employed applicants, as their income is more predictable and verifiable.

  • Existing debt: Lenders will assess your current debt obligations to ensure that you have the capacity to take on additional debt.

  • Collateral: Some lenders may require collateral, such as a property or fixed deposit, to secure the loan.

Improving Your Credit Score for a Car Loan

If your credit score is below the desired range, there are several steps you can take to improve it:

  1. Pay your bills on time: Timely repayment of credit card bills, loans, and other financial obligations is crucial for maintaining a good credit score.

  2. Keep credit card balances low: Avoid maxing out your credit cards, as high utilization rates can negatively impact your score.

  3. Limit credit applications: Applying for multiple loans or credit cards in a short period can lower your score, so be selective.

  4. Monitor your credit report: Regularly check your credit report for errors or fraudulent activities and dispute any discrepancies with the credit bureau.


In conclusion, while there is no single minimum credit score for a car loan in India, a CIBIL score of 750 or above is generally considered ideal for securing the best loan terms. By understanding the importance of your credit score, taking steps to improve it, and meeting other eligibility criteria, you can increase your chances of getting approved for a car loan in India and achieve your dream of owning a car.

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