Source: foxbusiness.com

Life can be very unpredictable at times and you really don’t know what you will face the very next moment. There are times when one faces a severe crunch of funds instantly, assets owned can become a saviour in such difficult situations. A good option can be that instead of liquidating the assets, we can try to procure finances basedon the security of the assets.

The stress of placing collateral can be eased out if you have your car

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These days it is now possible that you can use your car as a security which can ease out your pressure. A Loan with a Car as Security can be received at a fast pace with a relatively cheaper interest rate as compared to a personal loan.

This is one unique solution that can help you out during the crisis. This is something that you pledge as security when you apply and plan to get a loan from the bank. In case you are unable to repay the loan, the bank may take possession of the collateral.

Earlier the most popular used collaterals were property, bonds, gold, savings certificates, deposits but now vehicles have also become significant. The best way of finding it would be to enquire with your bank and going ahead with formalities and legalities. When you choose your car as a security for a loan to your bank, the first step is that the bank will try to know the current value of the vehicle. In order to determine this, your car will be evaluated and checked by an expert who may inspect your vehicle.

They will then draft a report which will carry a number based on your car’s age, condition, and depreciation. Based on this report, the bank will propose a loan offer. The loan amount can easily vary between 80% up to 150% of your car’s value and completely depend on the bank’s policy and your risk profile. There are a few other things which they might consider like your good credit score.

It is absolutely true that your financial footprints play a significant role in getting your loans. If you are using your car as the security, then you can avail an attractive rate of interest. ensures that your repayments will be affordable and won’t weigh heavily on your finances. However, if you don’t clear your dues ofa loan, your lender can sell the car used as collateral, to pay off your loan and cover up the losses.

Getting started with your loan process

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The applicant should do proper research before considering this option. It is always good to have a primary set of knowledge before you visit a bank or finance company website to avail loan against car. A loan application form will be then filled which will incorporate details such as car make, model, year of manufacture, purpose of use (personal/commercial).

Once these details are filled and submitted, a bank representative/officer will be assigned to you. He/she will approach the applicant to complete the required formalities. One of his core responsibilities would be to assist you while filling up of a physical form for loan application along with the main mandatory documents. For more detail visit here.

The document includes bank details, copies of income tax returns for the last 2-3 years and copy of bank statement which will be required to be attached with the application form. Along with this, KYC documents such as identity and address proof and photograph also be will be enclosed in your loan application docket. Here are a few things which you should keep in mind while you decide to get your loan processed seamlessly.

Once documents are submitted, a verification and valuation process will be spearheaded by the bank/finance company to arrive at the current value of the car. One main point to highlight here is that now you don’t need any guarantor for the loan, as the car itself can act as a security. The second most important information is that you won’t loan access on a commercial vehicle or a vehicle that has a yellow number plate. Lastly, using your car as security before getting a loan has various advantages and benefits. These include the following: –

  • Fixed interest rate and installment throughout the duration of the loan.
  • Avail of a reasonably lower interest rate by using your car as collateral.
  • This can last long term ranging from one to five years, or up to 7 years in some banks.
  • You have the flexibility to choose from weekly or monthly installments.

Before you decide that you will be using your car as collateral/security on a loan

Source: allloanfinancing.com

Double-check and explore all your other options. You can seek help from a trusted family relative who is willing and might be able to offer a short-term loan. Plan in such a way that you have enough time to save up for the expense or find supplemental income to easily repay your loan. Before narrowing it down to one, try to find out the best option and ensure to read and properly understand the loan-related documents.

The best practices would be to simply compare repayment terms and conditions, interest rates and also find about all the hidden fees and processing charges in order to be 100% sure that the loan you have opted for is the best fit which not only suits your requirements but also is easy to pay off. Taking a loan is a safe option but try to avoid unnecessary debts, After all, a debt-free life is a stress free life.

Don’t let the ticking EMIs drain your mental peace. Experts advise savings a still healthier and happier option because your wants are limited and your desires can easily wait. One way you can stay away from this debt trap is by comparing yourself with your other contemporaries. Try to lead a satisfying life and fulfill all your needs with pride and integrity. Rethink and revisit the cause before opting for a loan and putting your car on stake.

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