The availability of car loans makes it easier to buy your dream vehicle. Just as you take your time to research different types of car models, it is important that you understand all about car finance.
When you avail of a car loan, you are required to make some down payment and the balance is paid by the lender. Some financial institutions may make it more lucrative to avail of a loan by including Equated Monthly Installment (EMI) waiver or some other beneficial clause.
Here are some benefits of loan against vehicle:
- Higher eligibility
A large number of banks and Non-Banking Finance Companies (NBFCs) offer vehicle loans, thereby making the market highly competitive. Moreover, several institutions have a presence in rural and smaller towns to provide loans to a larger percentage of the population. If you are able to meet the basic income loan against vehicle eligibility, you may easily avail of the finance from the lenders.
- Customization
Lenders often allow you to customize the repayment schedule to ensure that you are able to pay the EMIs in a timely manner without facing financial distress. You may choose to pay a higher down payment to reduce the EMI during the loan tenure. Alternatively, you may choose a longer tenure to repay the borrowed amount.
- No additional collateral
When you avail of a loan against car, the lender creates a charge on the vehicle itself. The institution does not require additional collateral such as property or other assets to secure the loan repayment. Moreover, when you repay the loan amount, the lender releases its charge on the vehicle, thereby providing you with complete ownership. In case of any default, the lender takes possession of the car to recover the outstanding loan amount.
- Lower down payment requirement
Several lenders finance up to 90% of the value of the vehicle. Some institutions also offer up to 100% of the ex-showroom price. Therefore, you do not have to pay a huge down payment upfront, thereby reducing your financial distress. With higher funding, you may still be able to bring home your dream car even if you do not have a large amount to meet the upfront payment.
- Quick and simple procedure
It is generally believed that you need to follow a long and tedious procedure before the vehicle loan will be sanctioned and approved. Moreover, like most individuals, you may think you will need to meet cumbersome documentation requirements before the same is sanctioned. However, lenders require minimal loan against vehicle documents, which ensures the process is completed quickly without any delays.
- Affordable interest rates
Lenders offer you the option of choosing a fixed or floating interest rate. This allows you to enjoy flexibility during the loan tenure to ensure that you have no financial problem to service the outstanding amount on a timely basis. Based on your chosen option, the lenders provide affordable loan against vehicle interest rates. Some factors that affect the interest rate include the age and model of the vehicle, loan duration, and your credit score.
A large number of car dealers have tie-ups with financial institutions to offer vehicle loans. You must check the financing deals offered by the lenders because they may provide beneficial terms like EMI waiver or zero interest. You could avail of a car loan from these lenders and gain value-added benefits from them.