Owning a car in Canada is the second-best thing you can have after a house. Many people in Canada take loans for both these things. And not just this, they even use them as collateral to buy another house, a car or anything. It is rightly said that money makes more money. Right decisions are taken at the right time lead to an increase in the value of your valuables and assets. Not only a house or a car can be bought by keeping collaterals, but many more financial goals can be achieved by using your car as collateral. What is this collateral we are talking about again and again? Let’s find out.
What do you mean by collateral?
Collateral is a security that you pledge with the lender so that you can get some money in return for it. Once you’ve pledged the security, you cannot sell it until you repay the loan amount with interest. Only after you pay back the amount your vehicle will be free from the stamp of collateral. Till then, your car registration document will be endorsed as collateral. It is necessary to do so. After all, it is you who has taken the money against that car. Selling it to somebody else will put you and the buyer both at risk. So, in short, taking money by pledging your car with the lender is what car collateral loans are all about.
Car Collateral Loan and all about it
- Who can – Anyone with good credit can get a loan against their car. By good credit, we mean two things, vis-a-vis good credit history and even better credit score. Car is one of the most valuable assets Canadians have. So, anyone with good credit and a car can get the loan. The vehicle being considered for collateral must be in the name of the person wanting the loan (borrower). A credit score of 630 or above will do good in your favour.
- With whom - Many banks and lending institutions are there where you can go and pledge your car for money. These lenders no doubt take a risk every time they lend money, but pledging collateral reduces that risk to some extent. Hence, go to a verified and trusted lender only who’d do proper paperwork that’ll help both the parties involved.
- Which car - The loan amount you’ll be entitled to, mostly depends on the condition of your car. Better the condition of your car, the more loan amount you can get. New cars can get you more as compared to second-hand ones. Model and style also decide the loan amount. Other factors include insurance, ownership, damages, vehicle age etc. which are inspected by an expert from the lender’s side only. Although the final say would be there’s only, you too can get it checked at your end just to have a rough estimate of the loan amount.
- How much – Car collateral loans you’ll be getting against pledging your car might be more than what you need. Make sure to not get lured by more money. Take only the required loan amount. More you take, the more will have to be returned, that too with interest. Generally, 60 to 70 percent of your car value will be given to you as a loan. In rare cases, this number can even be 120 percent too. It all depends on the customer’s risk profile.
- Interest rate – One can negotiate on this factor provided you have good credit. People with no credit history or bad credit be ready to pay more.
- Advantages – The money you get from pledging your car can be used for important things. Good credit history can help you get a lower rate of interest and your amount may be disbursed quickly.
No doubt, car collateral loans are easy to get but there’s something important you must know. Any lender will give away a car collateral loan easily and quickly. But the lesser-known fact of these loans is that you’ll lose the custody of your vehicle if payments are not made in time. As long as you are regular with your payments, there’s nothing to worry about. These loans carry a lot of potentials. Customers can make more out of their car by taking a loan against it and using the money somewhere useful.
You can fill our application form online to get your loan now.
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