Want to raise cash? Your car can be put to good use.
A new type of finance, called loan versus a car, is quick becoming popular. Typically a loan is offered for the purchase of a car, but now banks also lend versus an existing car. For a private, this opens a new avenue for raising financing. Pawn your Car for cash if you are stuck in a financial rut.
Since this is a loan versus collateral, rates are excellent also. While banks do not market it aggressively, HDFC Bank, Kotak Mahindra and a couple of others provide this loan. If you already have a car loan, it works somewhat like a top-up loan.
Interest rates charged on this loan start from 13.5 percent for HDFC Bank and 14-14.5 percent for Kotak Mahindra Prime. Rates of interest can go as high as 17-18 per cent in case the car against is old and is valued less.
Yet, the rate of interest are better than personal loans. In case of a top-up loan versus cars, the dispensation is faster too. The paperwork requirements are same like any other loan. For example, HDFC and Kotak Prime disburse this top-up loan in two-three working days. The possession gets hypothecated for the loan period.
Unlike when it comes to other properties, such as a home, versus which one can obtain a loan, in this case the cost of the car will diminish in value and, thus, there is a various kind of risk the bank will bear. One of the conditions a person may need to meet for this type of a loan is that some banks will lend just to an existing consumer who might have currently taken an auto loan, as the lender has actually currently developed a relationship with the consumer and knows the client details.
On an average, the bank will provide you a loan that is 70 to 80 percent of the present market price 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 wind up getting a lower loan. Typically, the maximum devaluation of the car value takes place in the first year.
HDFC Bank doesn’t offer a loan versus a car whose age is not more than six years for personal ones and seven years when it comes to commercial automobiles. The loan is provided for an optimal period of 60 months depending on the age of the car.