Unsecured Car Loan

Benefits

1. No collateral requiredCollateral or security is any asset a borrower can put up to stand as surety that he/she will repay the loan. In case the loan cannot be repaid, the lender/bank has the right to sell off or take possession of the collateral to recover the loan money that has not been paid. In the case of unsecured loans, there is no risk of losing any asset if the borrower cannot repay the loan. This feature is especially beneficial for students or freshers who don't possess any assets yet.
2. Quick approvalSince the requirements are lesser than secured loans and there is no security required, the loans are approved and processed faster.
3. Flexibility with tenureBorrowers can usually negotiate on the repayment term according to their repaying capacity and come to an agreement with the lender. In case of being unable to repay the loan, the borrower can again make an agreement to extend the tenure. This is solely subject to the flexibility of the lender.
4. Flexible interest ratesThe borrower can also negotiate the interest rate and may even have the option of choosing a fixed or variable interest rate.

Things to keep in mind

1. These loans usually have higher rates of interest.
2. Borrowers should have good credit history and be a low risk factor.
3. Remember, having no credit history could also affect your chances of getting an unsecured car loan.
4. Lenders may ask the borrower to show a stable source of income.
5. Family members can act as guarantors for unsecured loans, which means they are willing to pay if the borrower is unable to repay the loan.
6. Not repaying the loan doesn't mean the borrower goes scot-free. In the future, a loan will not be sanctioned by any financial institution as the borrower will be black-marked. It is difficult to rebuild credit history, although not impossible.

Unsecured loans have their advantages and disadvantages. The disadvantages shouldn't be a deterrent. When looking for a car loan, weigh out all your options, check to see which type of loan suits you best. In case you decide to borrow an unsecured car loan, check with your bank to see what options they can give you. If you are looking for a small-time money lender or financial institution, be sure to check the trustworthiness of the lender. Do not be hasty and check for any invisible strings attached. Learn to ask all the right questions about every detail of the loan and the car. Make your dream of owning a car come true in the best possible way.

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