Having a low Credit Score? Here’s How You Can Still Get a Car Loan

Author: Jeo George•Published on: 11/17/2025
Overview:Having a low credit score is a nightmare for all of us, especially for those who wish to invest a large sum in a commodity, such as a car. A low credit score is the biggest hurdle one can face when obtaining a car loan, as lenders and banks consider it a sign of risk that can lead to defaults and repayment failures. If you wish to get a car loan but have had your credit score hampered, knowingly or unknowingly, due to unfortunate events, worry not. Many people are still able to get a car loan by following gradual and proper measures. Here, we'll let you know of the ways, both short-term and long-term, to obtain a car loan for yourself, despite having a low credit score.
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Issued by Credit Information Bureau (India) Limited (CIBIL), a person's credit score is a three-digit number that determines their creditworthiness based on their track record of repayment and financial transactions. Ranging between 300 and 850, the credit scores are classified into the following categories:

  • 300-580: Poor
  • 580-670: Fair
  • 670-740: Good
  • 740-800: Very Good
  • 800 and above: Excellent

For those with a low credit score below 670, it's usually tough to secure a car loan, as some lenders outright reject proposals due to low scores. And the lenders who agree to give a car loan typically charge much higher interest or offer a plan with a higher down payment or shorter loan tenure (or even both).

Ways to Get a Car Loan Even with a Low Credit Score

Unfortunately, people with low credit scores have to work harder and take additional steps to get a car loan, while also making a few compromises along the way. Here are some ways through which availing a car loan is possible despite having a low credit score:

Tip 1: Improve Your Credit Score Before Applying

This move is helpful only if you know your credit score well in advance. Suppose your credit score has dropped significantly due to mistakes in the past. In that case, you have the flexibility to improve it by clearing existing debts promptly and without pendency, keeping your credit utilisation as low as possible (ideally, avoiding it entirely) and refraining from making new credit enquiries. Following these measures will gradually increase your credit score by a decent margin.  

Tip 2: Save for a Larger Downpayment

One of the most common prerequisites for obtaining a car loan, even with a low credit score, is that lenders require a higher down payment to reduce the risk of repayment failure. To be on the safer side, it is recommended to save more for a higher down payment, ideally around 30-40% of the car’s value.

Tip 3: Explore Different Lender Options

In case of low credit scores, big banks and financial institutions might step back from offering car loans. However, as alternatives, there are several non-banking financial companies (NBFCs) that often take the risks of providing car loans with reasonable interest rates and tenure options. It is advisable to obtain multiple quotes from these NBFCs to find the most suitable choice.

Tip 4: Consider the Option of a Co-Applicant

While most banks reject car loan applications from people with low credit scores, some offer the flexibility of allowing a co-signer or co-applicant to pass the loan file. In such cases, a third party – usually a family member or friend of the borrower – is taken as a co-applicant in the loan, with their documents also taken as supporting documents.

However, one must be aware of the potential risks before signing in as a co-applicant, as their credit score will also be affected in case of repayment failure or missed payments.

Tip 5: Don’t Go for a Car Beyond Your Means

To avoid unnecessary financial strain, it is advisable to resist the urge to buy a bigger, fancier car and settle for one that is more affordable and within your means. Choosing a budget car model also increases the chances of loan approval, as the lender will have greater confidence in repayment.

To Sum it Up

While a low credit score makes it difficult to obtain a car loan, it is not a final sign that makes car ownership impossible. People can still get cars on loans despite having low credit scores, by having some patience, making some smart moves and even some healthy compromises.

FAQs

  1. Can a low CIBIL score get a car loan?</br>It is possible to get a car loan with a low CIBIL score. However, some additional measures need to be taken, such as conducting more research, obtaining quotes for car loans from NBFCs, improving credit scores by making timely payments, and avoiding inquiries about additional debt besides the car loan.
  2. Can I get a car with a 550 credit score?</br>A credit score below 580 is considered poor, which can create hurdles and result in rejections when applying for a new car loan. However, completing additional tasks like improving your credit score before availing the loan and making timely payments can enhance your credit score over time. After this, you can reapply for the loan. Even with this low score, several NBFCs can offer you a car loan, but with certain conditions, such as co-applicant documents, a higher down payment, and a higher interest rate.
  3. What is the lowest credit score I can have to buy a car?</br>A credit score above 700 is generally good for getting a car loan more easily. However, even with lower scores, you can get a car loan, but with specific terms and conditions.