Going for a loan against a car is one of the smartest ways to finance your immediate financial needs. Private loan against a car is an easy, quick, and hassle-free way to get funds to fulfil various personal or business-related requirements. All you need to do is pledge your car as collateral to a lender, and they will provide funds equal to a percentage of the car’s current market value.
In this article, we will discuss the basics of taking a private car loan, how it works, the documents required, and much more.
What is a Private Loan against a Car?
A private loan against the car is the type of loan facility designed for those who need cash but do not want to sell their car. Private lenders offer these loans and provide funds based on the value of the vehicle you are pledging as collateral.
This type of loan allows the borrower to access quick and flexible funding solutions without going through the lengthy procedures of traditional bank loans. Private loan against car offers a higher loan amount and can be an excellent financing option for buying property, emergency medical expenses, or other significant financial requirements.
How Does a Private Loan Against Car Work?
A private loan against a car works by using your car’s present market value as collateral. Once you apply for the loan, the lender will evaluate the current market price of your car and offer you a percentage of the value as a loan amount. The loan amount may vary depending on the car’s value, but generally, private lenders provide up to 70% to 75% of the car’s market value.
With a private loan against a car, you have the option to choose the tenure for the loan repayment, which can range from six months to three years. The repayment terms usually depend on your loan amount, income, and credit history.
Documents Needed for Taking a Private Loan Against Car
The loan against car documents are required for minimal compared to traditional bank loans. The documents required may vary from lender to lender, but generally, all private lenders ask for the following documents:
1. Identity Proof: Aadhar Card, PAN Card, Driving License or Passport.
2. Residence Proof: Electricity bill, landline bill, gas connection bill, Ration card, Passport, Voter ID.
3. Car Registration Documents: Registration Certificate, Insurance Certificate, Pollution Certificate.
4. Income-Related Documents: Bank Statement, Salary Slip (for salaried individuals), Business Document (for self-employed individuals).
It is always advisable to check with your lender regarding the additional documents that they may require for a private loan against a car.
Advantages of Private Loan Against Car
1. Quick and Easy Process: The private loan against a car is one of the simplest and quickest ways to borrow money. The process is easy, and the loans get approved quickly.
2. High Loan Amount: With a private loan against a car, borrowers can get a higher loan amount compared to other loan schemes. The loan amount generally ranges between 70% to 75% of the car’s market value.
3. Flexible Repayment Options: Borrowers can choose the repayment tenure according to their needs. This flexibility helps in the smooth coordination of loan repayment.
4. No Credit Score Required: Private lenders do not consider credit scores while lending money. This makes it easy for borrowers with a low credit score to avail of the loan facility.
5. Low Rate of Interest: The rate of interest for a private loan against a car is comparatively lower than other loan schemes. This makes it affordable and budget-friendly for borrowers.
Disadvantages of Private Loan Against Car
1. High-Interest Rates: Private lenders charge a high rate of interest due to the collateral-free nature of the loan.
2. Risk of Losing Car: In case you fail to repay the loan, the lender has the right to take possession of your car.
Conclusion
A private loan against a car is a great financial tool that helps people access quick and flexible funding solutions. The simple process of the loan, coupled with the high loan amount and flexible repayment options, make it one of the most sought-after loan facilities in India. However, borrowers should also weigh the risk of losing their car against the benefits before deciding to go for this loan. With proper planning and timely repayment, a private loan against a car can be a great tool to fulfil your financial goals.
