When it comes to a loan against a car, having proper documentation is essential. This type of loan allows car owners to get quick cash by leveraging the value of their car. However, many people fail to understand the importance of proper documentation while applying for this loan and end up facing negative consequences. In this article, we will discuss the importance of proper documentation in the loan against car and the key documents required for availing this loan.
Importance of Proper Documentation in Loan against Car
One of the primary reasons why the documentation process is crucial in a loan against car is that these loans are secured loans. This means that if the borrower fails to repay the loan, the lender has the legal right to sell the car to recover their money. Without proper documentation, it can be challenging for the lender to establish ownership and the value of the car. Hence, proper documentation can help the lender reduce the risk involved in loaning the money.
Another key benefit of having proper documentation is that it helps to expedite the loan processing time. Whenever a lender provides a loan, they need to verify the borrower’s identity and the value of the asset being pledged. With proper documentation, the lender can quickly establish the value of the car and the borrower’s eligibility for a loan. Proper documentation also helps to prevent any errors or inconsistencies in the loan application form, which can lead to rejection of the loan application or delays in the processing time.
Key Documents Required for Availing Loan against Car
1. Car Registration Documents: One of the essential documents that need to be provided is the car’s registration document. This document establishes legal ownership of the car, and it needs to be in the name of the borrower applying for the loan. Before applying for the loan, it is essential to ensure that the car registration document is up to date and carries all the necessary details like the owner’s name, engine number, and chassis number.
2. Car Insurance Certificate: Another crucial document required for a loan against car is the car insurance certificate. This document provides the lender with details about the car’s condition, including the year, make, and model of the car. A valid insurance certificate also ensures that the car is insured against accidents, theft, or any other kind of damage.
3. Identity Proof: Identification documents like a passport, driving license, or Aadhaar card are required to prove the borrower’s identity. It is essential to carry the original identity proof and a photocopy of the same while applying for a loan against car.
4. Address Proof: A copy of an address proof document like a utility bill, ration card, or bank statement is also required. This document establishes the borrower’s legal address and helps the lender to verify the borrower’s credentials.
5. Income Proof: Providing proof of income is also essential when applying for a loan against car. This document can be in the form of salary statements, income tax returns, or bank statements and helps the lender establish the borrower’s ability to repay the loan.
Loan against Car Eligibility
To avail of a loan against car, the borrower needs to meet certain loan against car eligibility criteria. These criteria are primarily based on the value and condition of the car and the borrower’s ability to repay the loan. Generally, the car should not be more than ten years old, and its value should be at least thrice the amount of the loan. The borrower needs to be above the age of 21 and should have a steady source of income to repay the loan. These eligibility criteria may vary from lender to lender.
Applying and availing of a loan against car is a simple and convenient option for those who are in need of quick cash. However, it is essential to ensure that you have all the proper documentation in place before applying for the loan. Failing to provide proper documentation can lead to delays in the loan processing time, or even worse, rejection of the loan application. So, if you are planning to apply for a loan against car, make sure you have all the necessary documentation in place to increase your chances of getting the loan.