Buying a car is a big financial decision, and for many, opting for car finance is the most practical route. But before any loan is approved, lenders like Esteem Finance conduct a thorough evaluation to ensure the applicant meets their criteria. Understanding what goes into determining your car finance eligibility can help you prepare better, avoid surprises, and increase your chances of approval.
In this post, we’ll break down the key factors Esteem Finance looks at before approving a car loan.
Credit Score and Credit History
Your credit score is one of the first things Esteem Finance checks when assessing your car finance eligibility. A high credit score indicates financial discipline, regular repayments, and low risk. If you’ve maintained a good credit record over the years, you’re more likely to get approved — often with better interest rates.
Even if your score is average or slightly below, don’t lose hope. Esteem Finance may still approve your application, but possibly at a higher interest rate or with a larger down payment.
Monthly Income and Employment Stability
Your income level helps determine whether you can comfortably afford the monthly EMI (Equated Monthly Installment). Esteem Finance usually requires proof of a stable income source, such as:
- Salary slips (for salaried employees)
- Bank statements
- ITR or business income documents (for self-employed individuals)
In addition to income, the stability of your employment plays a key role. Lenders prefer applicants who have been with the same employer or in the same line of work for a few years. Job hoppers or newly employed individuals might be seen as higher-risk borrowers.
Existing Loan Obligations (Debt-to-Income Ratio)
Another crucial factor in car finance eligibility is your debt-to-income (DTI) ratio. This is the percentage of your monthly income that goes toward existing loans or credit card payments. If a large portion of your income is already committed to EMIs, lenders may be hesitant to approve a new car loan.
Esteem Finance generally prefers applicants with a DTI ratio of less than 40–50%. If you’re above this range, it’s a good idea to pay off smaller debts before applying.
Down Payment Capability
Though many car finance providers offer high loan-to-value (LTV) ratios — sometimes up to 90% of the car’s price — a solid down payment strengthens your case. A larger upfront payment reduces the loan amount, lowers the EMI, and signals financial readiness.
Esteem Finance views applicants with strong down payment capability more favorably, as it lowers their lending risk.
Type and Age of the Vehicle
The kind of vehicle you want to finance also affects your car finance eligibility. New cars are easier to finance compared to used ones, especially if the used car is more than 5–7 years old.
Esteem Finance considers:
- The resale value of the car
- The manufacturer and model
- Whether it’s a personal or commercial vehicle
Cars with strong market demand and better resale value are more likely to be financed at favorable terms.
Residential Stability and Location
Where you live — and how long you’ve lived there — may also play a role in car finance eligibility. Esteem Finance checks your residential stability, which helps them evaluate your reliability and traceability.
If you’ve been at the same address for several years, or own property, it could improve your application strength. Urban applicants may also get quicker approvals, thanks to better accessibility and vehicle tracking infrastructure.
Documentation Accuracy
You’d be surprised how many applications get delayed or rejected due to incorrect or incomplete documentation. Esteem Finance requires standard documents like:
- ID proof (Aadhar, Passport, etc.)
- Address proof
- Income proof
- Bank statements
- Vehicle-related documents
Make sure everything is updated, legible, and consistent. Even minor discrepancies can cause unnecessary delays.
Co-applicant or Guarantor (if needed)
In some cases — especially when the applicant’s income or credit score is borderline — Esteem Finance may suggest adding a co-applicant (usually a spouse or parent). This increases the combined eligibility and boosts the chances of approval.
A guarantor with strong financial credentials can also help, although it may not be mandatory in most standard cases.
Final Thoughts
Understanding the factors that influence your car finance eligibility helps you take control of the loan approval process. Esteem Finance doesn’t just look at numbers; they assess the complete financial picture to make fair and informed decisions.
To increase your chances:
- Maintain a good credit score
- Keep your documents ready
- Opt for a reasonable loan amount
- Show employment and income stability
- Offer a solid down payment if possible
With the right preparation, getting your dream car financed can be a smooth and hassle-free experience with Esteem Finance.
