Loan Against Car: How It Works and What to Expect

When you need to resolve urgent financial emergencies, you can opt for acquiring a loan against car. This will help you obtain financial aid quickly without losing your asset. This can be a good way to acquire funds without breaking your savings. However, understanding all aspects of this type of loan is important to make an informed decision. So in this blog, you will understand how this loan works, the steps to apply for it, and more.

How Does a Loan Against a Car Work?

It is a kind of loan where money is borrowed by providing the car as collateral or security. The lender will determine the value of your vehicle and then provide you with a loan based on its worthiness. You need to provide some documents such as registration documents for the car, insurance papers, ownership certificates, etc. to complete the loan process.

Step to Avail a Loan Against Car

There are some steps you need to follow to get a loan against your car. They include the following.

Step 1: Online Application

To begin the process, you need to fill out an application form. By doing so you can easily avail of a loan on a used car online by submitting your personal and financial information.

Step 2: Document Submission

For getting a loan against a car, you may need just a small number of papers to fill out when applying. The things you are required to prepare vary depending on whether you have a salaried job or run a business.

Step 3: Verification

Upon submitting the loan application on the existing vehicle along with the required documents, the lender will carry out through verifications.

Step 4: Approval

If your application is valid and without any discrepancies, you will get immediate approval for the loan.

Step 5: Loan Disburtion

Once your loan application is accepted, your amount will get approved and money will be paid to the bank account.

What to Expect when Applying for a Loan Against Car?

Make an informed decision by understanding what you should expect during the loan process. Here are the important points to note.

• Flexible Repayment

Loan against a car has generally adjustable payment options. As a rule, one may prefer any payment duration of up to five years depending on his/her financial situation. This helps in arranging the monthly instalment easily.

• Quick Approval

The loans are approved quickly once the important documents are submitted to the lender and verification is complete. This provides faster disbursement of funds which is particularly helpful in emergencies.

• Interest Rates

Loan against a car usually has lower interest rates than unsecured loans. This is because, in this case, the car serves as collateral and reduces risk for the lender. Hence, you should compare rates from different lenders to get the best deal.

• Retain Car Ownership

This loan does not result in a loss of ownership of the car. Even as you pay back the loan, you may use the same car against which the loan was granted. Therefore, financial obligations can be met without loss of property.

Eligibility Criteria to Acquire a Loan Against Car

Checing the eligibility criteria before applying for a car loan is essential because it makes the loan approval process faster. Below mentioned are some of the essentials for a loan against car which one must consider.

• Employment

A person must be employed to obtain a car loan. This is because employment helps one earn, which is necessary to repay the loan. The person could be a salaried employee or an entrepreneur.

• Nationality

Lenders check your nationality ensure that you can repay the loan. They can ask for various identity and and income proof for such checks. They usually ask for Adhar card, employment letter, etc for this.

• Age

The minimum age to apply for a loan is 18 years old as one can start earning by this age. The maximum age asked by most of the lenders is 80 years, because after this one may not be able to repay the loan.

Conclusion

If you need quick financial assistance without selling your car, a loan against your vehicle can be a great option. Some financial institutions such as Tata Capital offer efficient digital solutions and tend to offer better customer service while issuing loans than others. This type of secured loan lets you keep the ownership of your vehicle while receiving funds based on its value. You can have a smooth experience by understanding the process from application to disbursement. Moreover, now, you can apply for a loan through a car loan app which makes the process faster and easier. You can easily apply for the loan online and get the funds disbursed directly to your bank account.

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