When you find yourself in need of cash, it can be challenging to decide the best way to access it without damaging your credit score or reputation. In such a situation, borrowing some money from a bank or a financial institution can be the smartest option. A loan against the car is a good way to borrow, and knowing what documents you need can make the process easier.
A Loan Against Car Explained
A loan against a car is a secured loan, meaning that it uses your car as collateral. In simpler terms, the lender will keep your car documents or the logbook of your car in their custody until you pay back the full loan amount with interest. Typically, the lender lends a certain percentage of the car’s market value, normally ranging from 50%-90% of the car’s value. The loan interest rate largely depends on your credit rating, terms, and conditions of repayment.
The Benefits of Getting a Loan Against Car
When compared to other types of loans, getting a loan against a car has several advantages. Firstly, it’s much faster to get this type of loan fully processed and disbursed. This is because the loan is secure, and the lender holds the car logbook, which makes the risk of default on payments significantly lower. Additionally, if you’re applying on an online loan platform, processing of this type of loan usually takes a matter of hours.
Secondly, it’s also much more accessible to people from all credit rating levels. In other types of loans, banks or financial institutions perform credit checks before granting the loan, making it difficult for people with poor credit scores to access loans. But with a loan against the car, you don’t need a credit check, making it possible for anyone with a car to access a loan.
Lastly, it’s a flexible repayment plan. When you take a loan against the car, you can get longer repayment periods, ranging from three to 36 months, allowing you to repay the loan comfortably without putting any unnecessary pressure on your finances.
Loan Against Car Documents: What You Need to Know
If you’re thinking about applying for a loan against car documents, it’s important to understand the loan requirements. The requirements for the loan against the car documentation may vary depending on the loan provider. Here are some of the basic documents that are required for a loan against car:
1. A valid ID
Identity verification is crucial when applying for a loan against the car. Therefore, you will need to provide a valid ID card or a passport to get the loan processed.
2. Car Documents
As the loan is secured against your car, you will need to provide proof of ownership by submitting the original car logbook, also known as the vehicle registration certificate. The lender will take custody of the car logbook until you fully pay back the loan amount with interest.
3. Proof of Income
Your lender will require you to provide proof of income as part of the loan application process. Some of the commonly accepted proof of income include pay slips, bank statements, or tax returns. The proof of income helps the lender in assessing your ability to repay the loan back in a timely manner.
4. Insurance Document
Just like when you’re buying a car, it is essential to have insurance. If you have a loan against car, it is necessary to have comprehensive insurance that covers your car against theft, damage, or accidents. In some cases, the lender may include the insurance as part of the loan terms and requirements.
5. Vehicle Inspection Report
Some loan against car providers may require a vehicle inspection report, which checks the car’s condition. This report will check the car’s key components, such as the engine, brakes, transmission, steering, and suspension. The report aims to ensure that the car is in a roadworthy condition to minimize the chances of accidents that may lead to expensive repairs.
Conclusion
A loan against the car provides a fast, accessible, and reliable way of accessing cash that you need to sort out your financial issues. It’s important to have all the necessary documents at hand before approaching a lender. Your car documents are perhaps the most important documents needed when applying for this type of loan, so it’s important to ensure that they’re readily available and up to date.