Loan against car useful information process to get one

The loan against car scheme has been in place for a few years now. It is aimed at helping those who are in need of money , but need one for an urgent need. Under the scheme, you can get a loan against your existing car. The lender will then release the amount as long-term loan against your car. The loan is repaid over time as well. To know how this works and if it’s right for you, read on.

What is Loan against car?

Loan against car is one of the Best methods to get a loan on your car. You sign a contract with a lender and give them a partial ownership of your car. The borrower is agreed for the loan and payment process and pays a monthly installment to the lender. The lender gets interest on the outstanding amount as well. You sign a contract with the lender for a specific term and interest rate during the loan period. The loan period is usually 5 to 7 years. The loan amount is usually between 90% and 150% of the car’s worth.

How loan against car scheme works?

There are two types of loan against a car under the loan against car scheme: the purchase loan and the re-sale loan. Purchase loan works like a normal loan. You sign a loan agreement with the lender and repay the loan over a certain period of time. The lender gets interest on the loan amount as well. In re-sale loan, the lender takes ownership of the car. The loan agreement with the re-seller specifies the amount you will pay for the car. When the re-seller sells the car, the lender gets the amount as interest.

Advantages of using Loan against car Scheme

– Flexibility – A loan against car scheme is an excellent way to get yourself out of a pinch. Since you don’t need to get a new car, you can borrow against your existing car. With this, you can get a loan against your car and get out of a tight spot.

– Less Risk – With a loan against car scheme, you get a low-risk way to borrow money. You don’t have to put down a large amount, you just have to pay a monthly installment. And that too over a long period of time. This makes it less risky for the lenders as well.

Disadvantages of using Loan Against Car Scheme

– Repayment – The repayment on a loan against your car is usually higher than a normal loan. With it, you have to pay interest as well. – Loss of Car – Under certain circumstances, you can lose both your car and the loan amount. In such a situation, you may have to take another loan against your car. – Expensive Repayment – If the car’s worth decreases by 15% or more, you will have to pay a higher repayment amount. This is because the lender has now got only a smaller amount as interest.

Should you take loan against car?

If you are in urgent need of a money, then loan against car is a great option. It will help you get the loan in a short span of time usually 3 to 4 days. However, it is important to note that you will have to repay the loan over a long period of time. If the car’s worth decreases, you will have to pay a higher amount as repayment. Additionally, you will lose your car too. If you go for loan against car, ensure you have a backup plan. In case you don’t get the car in the stipulated time, you will have to come up with a backup plan. Apart from loan against car, you can also get A TOP-UP LOAN on existing vehicle