Monthly Archives: November 2016

Vehicle Finance – what you should know

 

Finance is the source for any kind of buying or spending activity. There are finances in terms of loans available for things that are essential however costs more than what people call as affordable.

Vehicle finance means availing of debt for purchasing a vehicle. The debt can be availed from banks or financial institutions in return for a certain amount of interest. In some cases, borrowers may also have to pay additional service charges over and above interest rates to the lenders. Before applying for a vehicle loan it is essential for the borrower to analyze his credit history. Credit history rates to the past loans availed repaid and number of defaults in each loan or loans. Good the credit history better will be the chances of getting the loan sanctioned quickly.

Since the vehicle itself is a form of security, usually lenders do not ask for collateral security for vehicle loans, because if the borrower does not repay they always have the chance to seize the vehicle, resell it to recover the loan amount. However, in certain cases where the loan is extended for luxury vehicles or vehicles with prices above a particular level security in the form of land, property or bank guarantee may have to be provided by the borrower.

In case of default in payment by the borrower the lender can use this collateral security to recover his dues. The loan appraisal process would require the borrower to provide his personal identification documents, bank statements, income returns and other similar personal finance documents before the loan is sanctioned and vehicle is ordered for delivery.

Also, when the vehicle owner wants to resell the vehicle, if required they may have to show the ‘No objection certificate’ which is given as a proof for complete repayment of the vehicle loan.