Wish to raise cash? Your car can be put to good use.
A brand-new sort of financing, called loan against a car, is quick ending up being popular. Normally a loan is available for the purchase of a car, and now banks likewise provide against an existing car. For a private, this opens a brand-new opportunity for raising financing. See Pawn and Drive Gauteng.
Given that this is a loan against security, rates are excellent too. While banks do not market it strongly, HDFC Bank, Kotak Mahindra and a couple of others use this loan. If you already have an auto loan, it works somewhat like a top-up loan.
Rates of interest charged on this loan start from 13.5 per cent for HDFC Bank and 14-14.5 per cent for Kotak Mahindra Prime. Interest rates can go as high as 17-18 per cent in case the car against is old and is valued less.
Yet, the interest rates are better than personal loans. In case of a top-up loan against cars and trucks, the dispensation is much faster too. The documentation requirements are same like any other loan. For instance, HDFC and Kotak Prime disburse this top-up loan in two-three working days. The possession gets hypothecated for the loan duration.
Unlike in the case of other assets, such as a house, against which one can avail a loan, in this case the cost of the car will diminish in worth and, hence, there is a different sort of danger the bank will bear. One of the conditions an individual may require to meet for this sort of a loan is that some banks will provide only to an existing consumer who may have already taken an auto loan, as the loan provider has actually currently built up a relationship with the customer and knows the client information.
On an average, the bank will offer you a loan that is 70 to 80 per cent of the existing market value of the car. The car need not be brand new. One can get a loan even against a second-hand car. Nevertheless, if you take loan against a car more than a year old, your car will be valued less and you will wind up getting a lower loan. Typically, the optimum devaluation of the car value takes place in the very first year.
HDFC Bank doesn’t give a loan versus a car whose age is not more than 6 years for personal ones and seven years in the case of industrial automobiles. The loan is given for an optimal period of 60 months depending on the age of the car.