SECURED AND UNSECURED CAR LOANS

SECURED CAR LOAN:- 

A secured car loan is a method of purchasing a car by giving your car as collateral to the bank. However, in this option, the borrower will be in possession of the car, and in case the borrower can't repay the loan amount, then the bank will seize their car and sell it at an auction to recover the loan amount.  Although, a car loan has always been a go-to option to purchase a car in India. There are two types of car loans that are available in the market. So let's learn more about both options in detail.

A number of banks, financial institutions and NBFCs provide the facility of a secured car loan. It is the most popular and smartest way of getting a car through a loan. The interest rate charged on secured car loans is very low because your car will act as collateral for the bank. Missing even a single instalment can affect your credit score. This will leave an impact for six years on your credit report and credit repayment history. And if the borrower can't repay the loan amount, then the bank will seize your car. So it's essential to repay the instalments of car loan EMI on time.

Banks give customers the flexibility to choose a loan repayment structure and tenure according to their budget and income. So borrower's can calculate the EMI amount according to their expenses beforehand using some online tools like a car loan calculator and then choose a tenure and structure according to their requirement and repayment capacity.

ADVANTAGES OF SECURED CAR LOAN:- 

1. LOW-INTEREST RATE:- The interest rate of a secured car loan is comparatively less. As it is a secured loan, your loan is backed by collateral (i.e. your car). So the rate of interest on secured car loans is comparatively lower than secured car loans.
   
   
2. EASY LOAN PROCESSING:- The entire loan processing of secured car loans is very easy, quick, effortless and hassle-free. As stated by the bank, the eligibility criteria are very lenient as one can quickly meet the eligibility criteria and submit all the minimum required documents to get funds from this loan.
   
   
3. LOAN AMOUNT:- You can borrow a huge amount from a secured car loan at a low interest rate because your car will act as a security for the bank.
   
   
4. INCOME REQUIREMENT:- As this type of loan is a secured loan, so your car loan is backed up by the car you're purchasing. So unlike unsecured loans, you don't necessarily need to have a high income to get your application approved.
   
   
5. LONGER LOAN REPAYMENT TENURE:- Customers get an extended repayment tenure for this type of secured loan. So you can repay the loan amount you've borrowed within 12 to 60 months. A number of banks offer this loan facility for up to 84 months.

UNSECURED CAR LOANS:- 


As the name suggests, this type of car loan is an unsecured loan. So you don't have to offer any collateral to the bank. To apply for an unsecured Axis Bank car loan, an individual should have a solid financial background, financial history and a decent credit record. 

ADVANTAGES OF AN UNSECURED CAR LOAN:-
 

1. CAR IS NOT AT RISK:- If you're applying for an unsecured car loan, then your car is not at risk. Because banks will seize your car if you can't repay your secured loan amount, but that's not the case for unsecured car loans.
   
   
2. QUICK ACCESS TO FUNDS:- You can quickly get funds disbursed to purchase a car of your choice. The entire application process of an unsecured car loan is very easy, quick and hassle-free.
   
   
3. LOW-INTEREST RATES:- The interest rate of an unsecured car loan is comparatively higher than a secured loan. But you can negotiate your interest rate and lower it even more if you have a decent credit score. Having a good credit score will also help you to avoid a number of charges. There are various banks that provide the facility of secured and unsecured car loans. So check your requirements, needs and capacity before making any decision. 

Also Read this:- Role Of EMI Calculator In Car Loan