A new trend of availing a personal loan against your assets is picking up. Of all the assets that you can mortgage, a car is a popular choice. You can avail such personal loan against vehicle in times of emergencies. Also, during such emergencies, it becomes challenging to maintain and upkeep your car. Instead, obtaining a loan against car is a much rational option to fund your financial needs.
The lender of the loan hires an expert to determine the market value of your vehicle when you apply for a loan against vehicle. An estimated 70-85% of the value of the vehicle is offered as a loan. Some lenders provide as high as 1.5 times the value of your vehicle. If you have a car in pristine condition.
On successful approval of your loan, the vehicle is hypothecated to your lender, and you cannot sell it before repaying the loan. You can get as long as two years of duration to repay your loan. Also remember, there is a penalty for prepayment of your loan.
Loan against car eligibility can be understood from reading the points below-
Any loan approval requires the applicant to have a stable income and a good credit score. The lenders are reluctant in offering loans to those who do not fulfill the eligibility criteria. Whereas the same is not the case for loan against car. It is more flexible than other forms of personal finance. Let us look at the points to remember when you apply for a loan against vehicle.
Your car should not be older than five years. This is the primary criteria for the majority of the lenders who fund loan against vehicle. Ensure that the car which is to be mortgaged should be available for sale as new vehicles as of today. Discontinued vehicles are not considered as a mortgage by the lenders. Minimum age of the applicant should be 21 years of age and a maximum of 65 years. Income proof needs to be enclosed to prove your repayment abilities.
Now that you are eligible to obtain a loan against car let us learn about the documents you need to furnish-
- Proof of Identity – Voter ID, PAN card, passport.
- Age Proof – Voter ID, PAN card, passport.
- Income Proof – Salary slip, account statement, and Return of Income.
- Address proof: Telephone bill, passport, and photo ration card
- Documents about the vehicle – Driving license, vehicle registration document, and vehicle insurance.
Make sure you apply for a lender who is reputed in the market so that you can get a good loan against car interest rates. Submitting all the required documents, as mentioned above, can help ease the process.
Generally, the make and model of vehicle, age of the vehicle and loan due on your existing vehicle are instrumental in deciding the value of your vehicle and tenure of the loan.
Make sure you adequately research and finalise the lender that offers the best rate of interest. Your existing bank or NBFC can help you to speed up the process in case you are a regular customer.