Auto Loan or Operational Vehicle Finance is one of the common type of consumer loans. It is designed for people in paid employment and businesses with proven ability to pay and or good cash flow to assist them acquire new cars or vehicles of their choice for personal or business use. Amount eligible for largely depends on ability to pay.
Here are 7 tips for you to take advantage of Auto Loan from your bank.
1. Joint ownership of the car.
When you take Auto Loan from your bank. The bank will provide finance for a percentage of the cost of the car while you provide finance for the rest. Often in the ratio of 70:30 for bank and customer respectively. The car is jointly owned by you and the bank until it is fully paid off. The bank ensures the car insurance is up to date and ensure tracking device is provided by the insurance company. The bank also ensures that the insurance company also provide adequate compensation in the event of accident, theft or damage to the car. The bank also ensures the manufacturer keeps to the warranted terms while the loan is being paid.
2. Flexible repayment structure.
Taking Auto Loan allows you own a new car without providing more than 30% of the cost of the car while repayment is spread over a period that may not exceed 60 months depending on your bank. Auto Loans frees your business or personal cash flow while you repay the bank from your future income. Repayment can be monthly, quarterly, bi annually or even annually depending on your cash flow.
3. The car is the collateral
The bank will not need additional collateral from you to grant your request for Auto Loan. The car or vehicle as the case may be is jointly owned by the bank and the customer and it is registered as such. Collateral my however be requested by your bank if the customer has issue/s with joint ownership by the bank.
4. Faster processing
Auto loan is one of the fastest loans to get from most banks. It comes with minimal documentations and can be obtained within hours of request. If you are able to provide the documentation requested on time and you are able to meet the bank’s credit criteria
5. No guarantor needed
Operational vehicle finance is one of the secured loan type that you do not need guarantor to get. All you need is evidence of being in paid employment or regular income as a self employed individual. Your employer will however commit to continually pay you salary to the bank that granted the facility and to inform the bank if you exit their employment before the loan is paid off. Some lender (especially microfinance banks) will take your post dated Cheques for loan repayment. While to a business entity, the director may have to provide additional guarantee to the bank since the business is a separate entity.
6. Flexible Interest Rate
Although the rates for Auto loan may be as high as that of unsecured loan types like Personal loans and as compared to other secured loans like mortgage and other secured loan. The rate is very competitive as most lender use rate to compete for your patronage.
7. Your Savings Remains Intact
It allows you acquire brand new car without depleting your savings. You can keep your saving where it belongs in your pocket and still get quality auto to be paid for against your future income. it enables you to buy a better car than you could otherwise afford. Trying to save money by buying an older model can result in more costly repairs being needed, which all amounts to a false economy in the long run.