Many times, people are in need of money, and a loan happens to be the easiest way to fulfill their financial needs. One of the alternatives for people is to get a loan against vehicle, which eventually enables borrowers to utilize the value of the vehicle to easily secure funds.
Know More About Loan Against Vehicle:
Also referred to as vehicle equity loan, a loan against a vehicle is a secured loan that leverages the vehicle as collateral. The lender offers the loan amount according to various factors, such as value of the vehicle, and the borrower repays the loan, including the interest value, after a certain time period.
How Does a Loan Against Vehicle Work?
The entire procedure of getting a loan against vehicle is quite simple to understand. Here is a step-by-step guide to help you perceive the same:
#1 Know about the eligibility:
Firstly, borrower must know their eligibility for getting the loan against vehicle by checking if they fulfill the required conditions, such as the age of the vehicle, the income source, and who owns the vehicle.
#2 Value of the vehicle:
Lender evaluates the overall value of the vehicle by keeping in mind different factors like the vehicle’s model, how many years old the vehicle is, the present condition of the vehicle, and how much mileage it has.
#3 Assessing loan amount:
According to the criteria, like the value of the vehicle, the lender can easily compute the loan amount that is a particular percentage of the total value of the vehicle.
#4 Computation of interest rate and the repayment method:
Lender can easily set the rate of interest and loan repayment schedule that solely depends on the lender, amount of the loan, and the borrower’s ability to pay and credit status.
#5 Loan issuance:
Once the loan agreement task is complete for signing, the lender proceeds with issuing the loan to the borrower.
#6 Loan repayment schedule:
The borrower will make the loan repayment schedule along with the interest amount over the prescribed repayment time, mostly it is in monthly instalments..
Advantages of Getting a Loan Against Vehicle:
#1 Offers faster accessibility to funds:
Loans against vehicles are mostly issued faster, therefore, borrowers can get the funding access easily.
#2 It has lower rates of interest:
When compared with the unsecured mode of loans, loans against the vehicle provide lower rates of interest, thereby making it the best and most affordable alternative for people who want money faster and smoothly.
#3 It provides flexibility when it comes to repayment schedule:
Lenders usually provide flexibility in the loan repayment schedule to the borrower. In this way, borrowers can opt for a loan repayment term as per their financial condition and the ability to pay.
#4 Here, credit scoring is not important:
One of the best parts about getting a loan against vehicle is that some of the lenders will not check your credit score. Therefore, getting loans against a vehicle is quite easier for borrowers who have bad credit scores.
#5 Vehicle can be kept with the borrower:
Over the entire tenure of loan repayment, possession of the vehicle remains with the borrower only, and the borrower can keep using the vehicle over that period.
Closing Thoughts:
A loan against vehicle lets you unlock your vehicle’s value without selling it. With financial institutions like Mahindra Finance, borrowers benefit from quick approvals, competitive interest rates and flexible repayment options. It’s a smart and secure financing solution that offers instant liquidity while letting you have complete ownership over your vehicle.
