Loan Against Car !
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Loan against car – In times of financial need, your car can serve as more than just a mode of transportation; it can be a valuable asset that provides access to funds through a loan against car. This comprehensive guide delves into the intricacies of loans against cars, exploring their benefits, eligibility criteria, application process, and key considerations.
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Benefits of Loan Against Car:
Minimal Documentation
Quick Loan Approval and Disbursal
Lower Interest Rates
Secured and Insured
Interest Rates and Charges:
Interest Rate: Vary between lenders but typically range from 9% to 15% per annum. Fixed and floating rate options may be available.
Processing Fee: Usually 0.5% to 2% of the loan amount, covering administrative costs.
Prepayment Charges: Some lenders impose a fee for early repayment, often 1% to 3% of the outstanding loan amount.
Late Payment Penalties: Fees charged for missed or delayed payments, which can increase the overall cost of the loan.
Eligibility and Application Process:
Eligibility Criteria
To qualify for a Loan Against Car, applicants usually need to meet the following requirements:
- Age: Applicants should be between 18 and 65 years old.
- Income: Stable income proof is required, which can be from employment or self-employment. Minimum income criteria vary by lender.
- Credit Score: A good credit score (typically above 650+) increases the chances of loan approval and may secure lower interest rates.
- Employment: Salaried individuals should have at least one year of work experience, while self-employed applicants should have a stable business history of two to three years.
- Residency: Proof of residency, such as utility bills or rental agreements, may be required.
- Car Age and Condition: The car should typically be less than 10 years old and in good condition. Lenders may have specific criteria regarding the make, model, and mileage of the car.
Application Process
- Research and Compare: Evaluate different lenders to find the best interest rates, loan terms, and additional benefits.
- Loan Pre-Approval: Consider getting pre-approved for a loan to understand your budget and improve bargaining power with car dealers.
- Documentation: Gather necessary documents, including proof of identity (Aadhar Card, Passport, PAN Card), proof of address (Utility bills, Aadhar Card, Passport), proof of income (salary slips, bank statements, ITRs), and recent photographs.
- Application Submission: Fill out the loan application with us aviirafinser.com loan against car
- Loan Approval: The lender will assess your application, verify documents, and, upon approval, issue a sanction letter.
- Disbursal: Once the loan is sanctioned, the amount is disbursed directly to the car dealer.
Repayment Options:
- Equated Monthly Installments (EMIs): Standard repayment method, where the loan amount plus interest is divided into equal monthly payments.
- Balloon Payments: Lower monthly payments with a larger final payment, suitable for borrowers expecting a future lump sum.
- Step-Up EMIs: Lower EMIs initially, increasing over time, ideal for borrowers expecting a rise in income.
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Questions & Answers
How does a loan against car work?
A loan against car is a secured loan where borrowers use their car as collateral to obtain funds from a lender. The lender assesses the market value of the car and offers a loan amount based on a percentage of that value. Once approved, borrowers receive the loan amount and continue to use the car while repaying the loan. In the event of default, the lender has the right to seize the car to recover the outstanding loan amount.
What are the benefits of opting for a loan against car?
One of the primary benefits of a loan against car is its accessibility and quick processing. Borrowers can obtain funds swiftly with minimal documentation. Additionally, loans against cars typically come with lower interest rates compared to unsecured loans, making them a cost-effective borrowing option. Furthermore, borrowers retain ownership of their cars while accessing funds, providing flexibility and convenience
What factors should borrowers consider before opting for a loan against car?
Before opting for a loan against car, borrowers should consider several factors. They should assess their repayment capability to ensure they can meet the repayment obligations. It’s essential to understand the terms and conditions of the loan, including the interest rate, repayment options, and any additional fees or charges. Additionally, borrowers should evaluate the loan-to-value ratio offered by the lender and ensure that it aligns with their financial needs. Lastly, borrowers should be aware of the risk of default, as failure to repay the loan may result in the forfeiture of the pledged car.
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Important Terms & Conditions
For example, if you take a loan of Rs. 7 lakhs at the rate of 9.45% with a repayment tenure of 5 years, your EMI will be Rs. 14,638. The total payable amount at the end of 5 years would be Rs. 8,78,280. Therefore, you are paying a total interest amount to the tune of Rs. 1,78,280. This, however, excludes other applicable charges which can be quantified as under: Loan Processing Charge @ 2% = Rs. 14,000, Car Valuation Charges = Rs. 260 per lac, Documentation Charges = Rs. 500, Amortization Schedule Charges = Rs. 200.
Aviirafinserv.com services are free of cost. We do not charge any fee from any of our customers. Loans are originated, booked, and serviced by our partner Banks/NBFCs. Subject to credit appraisal at the sole discretion of our partner Banks/NBFCs and terms & conditions as agreed under the individual loan agreement. Our Partner Banks and NBFCs don’t offer personal loans that require repayment in full within 60 days or less from the date the loan is issued. Subject to the necessary KYC and verification. In case of change of payment mode or swapping your Post Dated Cheques, additional charges are applicable. Also, depending upon the lender bank, prepayment options may or may not be available and the applicable charges may vary accordingly.
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