Want to raise cash? Your car can be put to good use.
A new sort of finance, called loan against a car, is fast ending up being popular. Normally a loan is readily available for the purchase of a car, but now banks also lend versus an existing car. For a private, this opens a brand-new avenue for raising finance.
Considering that this is a loan against collateral, rates are excellent too. While banks do not market it aggressively, HDFC Bank, Kotak Mahindra and a few others use this loan. If you already have a car loan, it works rather like a top-up loan. See: Cash loans against my car
Rates of interest charged on this loan start from 13.5 per cent for HDFC Bank and 14-14.5 percent for Kotak Mahindra Prime. Interest rates can go as high as 17-18 per cent in case the car versus is old and is valued less.
Yet, the rates of interest are better than personal loans. In case of a top-up loan versus automobiles, the dispensation is faster too. The documentation requirements are very same like any other loan. For instance, HDFC and Kotak Prime disburse this top-up loan in two-three working days. The asset gets hypothecated for the loan period.
Unlike when it comes to other possessions, such as a home, against which one can avail a loan, in this case the cost of the car will depreciate in value and, hence, there is a different kind of threat the bank will bear. Among the conditions an individual might require to satisfy for this type of a loan is that some banks will lend just to an existing consumer who might have already taken an auto loan, as the loan provider has actually already developed a relationship with the customer and understands the client information.
On an average, the bank will provide you a loan that is 70 to 80 percent of the present market value of the car. The car need not be brand new. One can get a loan even versus a second-hand car. Nevertheless, if you take loan versus a car more than a years of age, your car will be valued less and you will end up getting a lower loan. Usually, the optimum devaluation of the car value takes place in the very first year.
HDFC Bank doesn’t provide a loan against a car whose age is not more than 6 years for private ones and 7 years when it comes to industrial vehicles. The loan is offered for an optimal duration of 60 months depending on the age of the lorry.
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