How to Get a Car Loan in India with a Low CIBIL Score (2026)

CIBIL score (and equivalent scores from Experian, CRIF, and Equifax) ranges from 300 to 900. For car loans, banks categorize applicants into rough tiers that determine both approval likelihood and interest rate. Understanding where you fall helps you target the right lender with realistic expectations.

Score 750–900 (Excellent): All major banks (HDFC, ICICI, Axis, SBI, Kotak) will approve you and compete for your business. You qualify for their advertised best rates, which start at 8.75–9% for new car loans. Minimal documentation, fast processing.

Score 700–749 (Good): Most banks will approve you but at rates 0.5–1.5% above their best tier. Some banks may ask for additional income documentation or a larger down payment. You still have good options and should get competitive quotes.

Score 650–699 (Fair): Prime banks (HDFC, ICICI) become more selective. Some may approve with conditions; others may reject. NBFCs are more accessible and this score range is well within their approval criteria, though at higher rates (13–16%). Smaller banks (DCB, RBL, Jana Bank) also have more flexible underwriting in this range.

Below 650 (Poor/No History): Prime banks will almost certainly decline. NBFCs with specialized retail lending arms (Bajaj Finance, Tata Capital, Shriram Finance, Magma Fincorp) will consider applications, but with higher rates (15–20%), lower LTV (maximum 60–70%), and often with collateral or guarantor requirements.

• 750+: best bank rates, all options available
• 700–749: banks approve with slightly higher rates
• 650–699: NBFCs are primary route; some tier-2 banks possible
• Below 650: NBFCs, co-applicant strategy, or wait and improve score

Non-Banking Financial Companies (NBFCs) are the primary lenders for car loan applicants with CIBIL scores below 700. They have different risk models than banks, higher tolerance for credit imperfections, and specialized teams that underwrite based on income stability and repayment capacity - not purely on past credit score.

Bajaj Finance is one of the most active NBFCs for car loans, operating across 150+ cities. Their car loan rates start at 9.5% and go up to 18% depending on score and car age. Tata Capital offers car loans at 10.99–16% and is known for flexible approval for self-employed applicants with irregular income patterns. Shriram Finance and Shriram City Union are particularly strong in Tier 2 and Tier 3 cities and are the go-to lender for commercial vehicle and older car financing.

Mahindra Finance is notable for rural and semi-urban buyers, with significant presence in smaller cities where other NBFCs do not operate. Cholamandalam Investment and Finance (Chola) is another active NBFC in the used car loan space with a wide branch network in South India.

• Bajaj Finance: 9.5–18%, 150+ cities, good for salaried and self-employed
• Tata Capital: 10.99–16%, flexible for self-employed, cars up to 10 years
• Shriram Finance: tier-2/3 specialist, older cars, commercial vehicles
• Mahindra Finance: rural and semi-urban focus, flexible for agricultural income
• Chola (Cholamandalam): strong South India presence, used car focus

Adding a co-applicant is the single most effective strategy for a low-CIBIL applicant. The co-applicant (typically a spouse, parent, or sibling) must have a CIBIL score of 750+ and sufficient income. The bank evaluates the combined profile and typically applies the co-applicant's higher score as the primary creditworthiness indicator. The co-applicant becomes jointly liable for the loan, so they must be fully aware of this commitment.

Increasing your down payment significantly reduces lender risk. Standard LTV is 80–90% for prime applicants. At 60% LTV (i.e., 40% down payment), you are putting in more skin in the game, which makes the loan safer for the lender. Some banks that would otherwise decline at 90% LTV will approve at 60% LTV. Calculate: for a ₹10 lakh car, a 40% down payment means ₹4 lakh from your pocket and only ₹6 lakh borrowed.

Pledging an additional fixed deposit or life insurance policy as collateral with the lending bank converts the loan into a secured liability against two assets instead of one. Banks that have your FD on their books are more willing to extend credit on slightly riskier profiles when the FD provides additional security.

• Add co-applicant with 750+ CIBIL score (spouse, parent, sibling)
• Increase down payment to 40%+ to reduce LTV and lender risk
• Pledge FD or insurance policy as additional collateral
• Apply at bank where you have existing salary/savings account
• Avoid applying to multiple lenders simultaneously (multiple hard inquiries)
• Show consistent income via bank statements - even if CIBIL is low

If your purchase timeline allows 6–12 months of flexibility, improving your CIBIL score before applying is the most cost-effective strategy. A score improvement from 660 to 720 can reduce your car loan interest rate by 1.5–2%, saving ₹40,000–60,000 on a ₹10L 5-year loan. The investment of time is directly worth the savings.

The fastest CIBIL improvement actions: (1) Clear any overdue or NPA (Non-Performing Asset) accounts immediately - these are the heaviest negative factors. (2) Bring any credit card balances to under 30% of credit limit. High utilization (above 50%) significantly depresses scores. (3) Do not close old credit cards - length of credit history is a positive factor. (4) Ensure all active EMIs are being paid on time - even one missed EMI can drop your score 40–60 points. (5) Dispute any errors on your CIBIL report - incorrect data is more common than you think and can be resolved through the CIBIL dispute portal.

After taking these actions, wait a full 6 months before checking improvement and applying. Credit bureaus typically update within 30–45 days of data reporting from lenders, but sustainable score improvement takes 3–6 months of consistent on-time payment behaviour.

• Clear overdue loans and NPA accounts immediately
• Reduce credit card utilization to below 30% of limit
• Never miss an EMI on any active loan - even one miss is costly
• Do not close old credit cards (history length matters)
• Dispute errors on CIBIL report - visit TransUnion CIBIL portal
• Wait 6 months after corrective actions before applying for a car loan