When faced with a need to arrange funds at a short notice, your assets can come handy. Instead of liquidating them, you can arrange finances on the basis of the security of these assets. Similarly, it is possible for a car owner to avail quick funds against the security of the car. Loan can be availed at a fast pace and at a relatively cheaper interest rate as compared to a personal loan.
The applicant can visit the website of a bank or finance company to avail loan against car. A loan application form can be filled which asks for details such as car make, model, year of manufacture, purpose of use (personal/commercial). Once these details are filled and submitted, a bank representative approaches the applicant to complete the formalities. This includes filling up of a physical form for loan application along with necessary documents.
Bank details, copies of income tax returns of the last 2-3 years and copy of bank statement need to be furnished along with the application form. Along with this, KYC documents such as identity, address proof and photograph also need to be provided.
Once documents are submitted, a verification and valuation process is initiated by the bank/finance company to arrive at the current value of the car. The loan is then decided on the basis of this value.
Loan processing and documentation charges are payable at the time of loan disbursal. The loan is provided for a duration of 18 to 60 months.
Points to note
The loan may not be processed against a commercial vehicle or one with a yellow number plate. No guarantor is required for this loan as the car itself is the security.
(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)