A loan against a car is a type of secured loan that uses your vehicle as collateral. This financial product allows you to borrow money while keeping your car as collateral. We’ll go over the fundamentals of a Loan Against Car below, including how it works, the benefits, and some important factors to consider.
What is a Loan Against Car?
Loan secured by a vehicle or A simple and convenient way to borrow money using your car as collateral is through car refinancing. It turns out to be a fantastic option if you need quick money for a variety of expenses. With this kind of loan, you can have a secured option without having to pledge any other assets.
Features
- Up to 50% of the value of your car can be lent to you.
- Bank offers qualified clients Loans Against Cars up to a maximum loan amount of Rs 1 lakh.
- Pre-approved loans are available to you if you are a Bank privileged customer, and you need very little paperwork. Additionally, you can benefit from favourable interest rates and quicker loan approval.
Eligibility Criteria
- When applying, you must be between the ages of 21 and 65.
- Less than ten-year-old cars are eligible for loan collateral.
- You are qualified to apply for loans regardless of whether you work for a salary or on your own.
- When taking out a loan against your car, Bank requires you to have a respectable income level.
Documents Required
- You may present a voter ID card, passport, or PAN card as evidence of your age.
- Form 16 or ITR, the previous three months’ worth of pay stubs, and a bank statement
- A PAN card, a driver’s licence, or a photo ration card bearing your date of birth, as documentation of your identity
- To obtain a loan, you must also present legal documentation for the vehicle you want to use as collateral. These records include the registration certificate and legitimate documents from motor insurance policies.
Repayment Options for Loan Against Car
- Regular EMI (Equated Monthly Instalment): For auto loans, this is the most popular way to repay the debt. You will make a set monthly payment for a predetermined length of time when you have a regular EMI. It is easy to budget for your car loan payments with this option because it is straightforward and predictable.
- Step-up EMI: Step-up EMI will be used to make the monthly installments, which will begin small and increase gradually over time. If the initial budget is tight, this might be a good option. Keep in mind that the total interest payments for a step-up EMI will be higher than those for a regular EMI.
- Step-down EMI: With a step-down EMI, your monthly installments will start at a higher rate and gradually decrease over time. This option could be beneficial if you expect your income to rise in the future. However, it’s important to note that a step-down EMI will lead to higher total interest payments compared to a standard EMI.
- Overpayment: When you have extra money, you can also overpay on your auto loan. By doing this, you can reduce interest costs and accelerate loan repayment.
- Refinancing: You might be able to refinance your high-interest auto loan with a new loan that has a lower interest rate. Throughout the loan and on your monthly payments, this can save you money.
A step-by-step guide to applying for a Loan Against Car
- Online Process:
- For information on auto loans, go to the Bank’s official website.
- Complete the online application and upload the necessary files to the lender’s official website.
- Your application will be carefully reviewed by the bank, and you will be notified by email or SMS regarding the status of your car loan application.
- Offline Process:
- Fill out the loan application in person at the Bank branch office that is closest to you. Add the required documents and the required photo ID.
- Complete the form and turn it in at the lender’s office. The bank staff will notify you as soon as the registration is complete about the specifics of the loan approval.
Conclusion
A car loan provides a practical way to get money. It offers flexibility with a range of repayment options, competitive interest rates, and little paperwork. It is a good option for those looking for immediate financial assistance because of its simple application process and safe features.