Your Car, Your Best Friend
In a financial emergency, your car can be your best friend. How? It’s simple. You can use your car as an asset for a loan.
Many banks offering loans against cars will give you up to 70–85% of the present market value of your vehicle.
You can even get a loan if you bought your car with a Car Loan.
How It Works
If you need a Loan against Car, the bank will give you a pre-fixed value with your car as collateral security.
When you get a Loan against Car, you will need to hypothecate your car to the bank. This means you cannot sell the car before you pay off the loan availed against the car.
Benefits of a Loan against Car
- Lower Interest Rates. The interest rates offered by banks on a Loan against Car are lower than the rates for Personal Loans, as a Loan against Car is a secured loan.
- A Good Credit Score. A Higher Loan. If you have a good financial track record and a good credit score, banks will offer you between 70-85% of the current price of your car.
Factors That Decide Your Loan Amount
The final loan amount offered by the bank depends on these factors
- The age of the car
- The vehicle model
- The overall usage
- The popularity of the model
Already Have an Ongoing Car Loan? Don’t Worry.
You can avail a Loan against Car even if you have an ongoing Car Loan. Various banks have different ways of offering a Loan against Car to existing Car Loan borrowers.
An advantage for an existing Car Loan borrower is that your top-up loan is disbursed faster, usually in 2-4 days.
Loan Tenure for Existing Car Loan Borrowers
The loan tenure for a top-up loan is limited to 3 years.
Tenure for Loan against Car
Banks offer a maximum loan tenure of 60 months for all Loans against Cars.
The loan tenure depends on
- Your loan amount
- Your vehicle model
- Whether you have an ongoing Car Loan or not
To apply for a Loan against Car, you will need to submit:
- Age Proof. A Loan against Car can be availed by car owners between 21 to 65 years of age.
- Identity & Address Proof. You will need to submit KYC-approved identity and address proof documents.
- Income Proof. A loan is available to both salaried and self-employed individuals.
Prepayment & Foreclosure
Banks have a prepayment penalty for Loan against Car depending on when you are making the foreclosure.
Closing the Loan against Car
As soon as you pay off the Loan against Car, you will receive an NOC from the bank.
You will need to submit the NOC to the Regional Transport Office in order to get the hypothecation removed and to transfer the Registration Certificate of your car back to your name from the RTO.