Car Loan Basic Information

Car Loan Basic Information

by

pankaj1

What is a Car Loan?

A car loan (vehicle finance) is a type of loan that a bank or lender gives to a borrower on certain terms and conditions. The loan is supposed to be returned by the borrower in installment on monthly or quarterly basis (also known as EMI or equated monthly installments).

Types Of Car Loans

Car loan is available in two distinctive categories – Secured and Unsecured.

Secured Car Loan

To qualify for the secured vehicle finance, the borrower has to give collateral security (e.g. a car or property) to the lender.

Generally, banks don t lend out 100% loan against the vehicle that you want to purchase. The vehicle will be financed up to 85% against the total costing. If the vehicle costs Rs 10 lakhs in Indian currency, the actual loan amount you will have from bank is around Rs 850000.

You should bear in mind that the value of collateral security should be equivalent to the price of the vehicle. In the aforesaid example, the value of collateral should be equal to Rs 850000.

Features of secured vehicle finance

You can purchase new or old vehicles of your choice.

The loan is available at the lowest interest rate.

Hassle free documentation.

Instant loan approval guarantee

Affordable loan on easy EMI

Negative points

You will have to risk your precious property to secure the finance.

If the loan is not paid off on time, the bank will seize your property/vehicle.

You will not have absolute ownership on the vehicle until you pay off the loan in full settlement.

Nominal chance to get the loan if credit history is not good

Unsecured Car Loan

This type of vehicle finance is not secured against borrower\’s properties. In other words, collateral security is not involved to obtain the finance from a bank.

Features of unsecured vehicle finance

No collateral security

No risk to lose property in case repayment is not made on time

Purchase your dream vehicle with ease and comfort.

Negative points

Interest rate on unsecured vehicle finance is very expensive

The tenure for which the finance is given is usually very short.

The loan amount is not sufficient unless you have enough down payments

Much documentation

Delayed processing to approve loan

Expensive EMI

Car loan EMI calculator for

HDFC car loans

Article Source:

ArticleRich.com