Category Archives: Vehicle Loans

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.

 

Finance arrangements for vehicles

 

After the advancement of technology in the field of automobile, vehicles have become one of the most essential things needed for our survival. The dependencies of people on vehicles have led to the availability of finance options to buy vehicle in terms of vehicle loans.

Vehicle loans are the biggest drivers of any economy. They aid in improving the standard of living of individuals with a quick stride unlike any other loan facility. Vehicle loans are provided by banks as well non-banking financial institutions. They charge a rate of interest in return for making funds available to the borrowers. Borrowers will be required to submit their personal identification documents like state authorized identities, employer certificates, address proof, etc. as part of the appraisal process. Past bank account statements, income returns and financials may also be required in order to complete the financial appraisal process.

Before obtaining a vehicle loan online, it is advised that people should check with several financial institutions asking for a quote of the vehicle loans they offer and shall choose the most suitable one based on the interest rate, EMI or loan repayment options and loan schemes, margin deposit required and their financial eligibility and such factors.

A borrower of vehicle loan will have to pay a certain lump sum amount as down payment for the remaining loan amount to be sanctions. This is called margin money and can be paid to the dealer directly or to the financier. The financier determines the rate of interest and the repayment period depending on the margin money paid. The amount of loan will then be broken in down into equal monthly installments which the borrower has to pay without fail to bank or financial institution. Default in repayment will lead to legal consequences and repossession of the vehicle.