The concept of loans against cars is a very common concept during financial emergencies. If you are struggling to get a personal loan to take care of your personal needs, you can apply for a loan against your car. That’s right! Many a time, your car can act as your best friend in dire situations.
Most lenders may not be ready to give you an economically priced personal loan if you do not meet the required eligibility criteria. In such cases, you could apply for a loan against your car. When you use your car as a collateral or asset for your loan, your chances of getting your loan application approved will be higher. There are a few banks and non-banking financial corporations in the country that offer loans against cars.
In most cases, the lender will offer a loan of up to 70 to 85% of the prevailing market value of your car. Your loan amount will be pre-fixed as per the value of your automobile. This value will most likely be fixed with the help of car experts who are appointed by the lender. Generally, the loan amount provided for a loan against car ranges from Rs.50,000 to Rs.7 lakh. You can utilise your loan against car for any personal requirements or even for buying a new car.
When your loan against car is approved, you will be required to hypothecate your automobile to your lender. Hence, this step will prevent you from selling your car until you repay your loan entirely. A loan against car is typically given for a period of 24 months. This can differ from lender to lender.
In case you decide to pre-pay your loan against car, you will be required to give a pre-payment penalty. This charge will be determined according to when you foreclose during your loan tenure.
A loan against car is a great alternative when your personal loan application or car loan application gets denied. For personal loan applications, you will typically need to have a steady income with a good employment status. You will also need a high credit score to get a good interest rate for your personal loan application. In case you fail to meet any of the necessary eligibility criteria, you can apply for a loan against car as this loan category does not have strict eligibility criteria.
However, you will need to meet certain basic criteria in order to get your loan against car application approved:
While applying for a loan against car, one should compulsorily apply for a loan against car:
When you intend to submit your car as a collateral for a loan against car, you need to keep the following documents ready:
Your quantum for a loan against car will be determined by:
The loan tenure for a loan against car will depend on:
In case you had purchased a car with the help of a car loan, you can still apply for a loan against car depending on your requirements. You may also be able to get a top-up loan very easily when you are already repaying a car loan. Your top-up loan will be disbursed in around 2 to 4 days. The loan tenure for this top-up loan option for existing car loan borrowers is up to 3 years. This is also a pretty common way of securing additional funds for your personal purposes.
There are certain banks and NBFCs in the country that provide pre-approved loans against cars for a few of their exclusive or privileged customers. The advantages of these pre-approved loans against cars include quicker loan processing and approval, immediate loan disbursal procedures, etc.
There are a few select banks and NBFCs that provide loans against cars. You may apply offline or online for these loans. You can either visit the official website of your lender or a third-party financial website to make comparisons before applying. You may also call a bank to get help for applying. Before applying, you could use an online EMI calculator to determine the EMIs for your loan against car.
To apply offline, you can directly go to lender’s branch and complete your application process. A branch executive will help you throughout the application process.
Once you finish paying all the EMIs for your loan against car, you will have to collect a No Objection Certificate (NOC) from your bank. You will then have to furnish this NOC at your Regional Transport Office for getting your car’s hypothecation removed since you have completely repaid your loan against car. Only then, your car’s Registration Certification will be transferred to your name again.
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