Fast Auto Loan
Fast auto loans:
We live in an environment in which the barriers between nations have reduced greatly due to globalization of various economies. This has led to a revolution in the launch of newer models in the automobile sector throughout the world. Companies have built on exports and have floated new car models and launched them into other countries. Customers desire to grab these new models crop up the need to arrange funds to buy these cars. Thus fast auto loans provide readymade source of funding to buy from a wide range of car models.
As the name suggests, this kind of loan option involves the dispersing of funds to the respective customers through a fast-trek method. In this, there are various formalities that are required for dispersing loans. These formalities are carried out in a step wise steady procedure. The dealer after completion of the documentation for a particular car model can get it ready for delivery. Thus, fast auto loans have given a great boost to the automobile sector and have a great impact on increasing sales of various kinds of auto models. These auto loans provide a facility to people with limited resources to buy a vehicle at nearly eighty percent loan.
Requirements before delivery:
Once a particular model is finalized by a customer and the loan amount to be availed is finalized the institute offering fast auto loan prepares a demand order for the respective dealer. Also the financer gets a field investigation done for the respective customer. This gives him an idea of financial status of an individual and his job. When all formalities are completed a demand order is issued by the bank to the dealer for a particular model. This demand order is issued for the total amount of loan availed by a particular customer and acts as a surety for the dealer. The dealer gets the whole value for the car sold as the loan amount will be paid by the owner of the car in parts or installments. Only after an insurance cover note is made the car can be delivered as the car is loaned and any damages outside the showroom will be borne by the insurance company. Thus the cover note acts as a security for the financer.
What is hypothecation?
The car which is being financed stays hypothecated in the name of the financer. Various car documents, particularly, the registration copy will bear the financing company's name till the loan amount is cleared. The hypothecated clause can be removed after repaying auto loan in full time frame or by making an advance closure of the availed fast auto loan. In case, an advance closure is made, the owner has to pay foreclosure charges that are generally five percent of the remaining loan amount. After closing a particular auto loan deal the customer should get a no objection certificate which will enable him to remove the hypothecated clause from various documents. Thus hypothecation is added to the car documents to highlight the loanstatus in case the car is further sold in second hand market during its financed period.
Second hand car loans:
Apart from big new auto sales market there is a second hand market which caters to the needs of clients who are looking for low priced cars. Fast auto loan facility is also availed by these clients. Rates of interests charged in the case of second hand cars are on the higher side as a greater accountability is involved. It generally ranges from sixteen to eighteen percent for all car ranges. Second hand market cars are low priced and are generally sold after proper repair of various electrical and mechanical parts. Some dealers have also opened good condition used car showrooms. They provide cars with two three services free and also a warranty for a specified duration. Thus they also avail a facility of various fast auto loans to increase their sales.
Advantages and limitations:
1. Advantages:
Various kinds of fast auto loans have been a very advantageous medium through which a non purchaser becomes a purchaser. Earlier when there were very few financing banks and institutions, purchase of cars was in particular by individuals who had surplus cash in hand. Therefore car sale figures were at a much lower level due to limited buyers. With the coming up of a large number of financial institutions demand for auto finance has increased manifolds. This has led to skyrocketing sales in the automobile sector. Thus the automobile business has come up in a big way and stands as a dominant industry. This has in turn led to greater employment as more people are required to suffice to the ever increasing demand of car sales and the associated after sales services. This auto loansector has in itself become a large employment source for various individuals involved. Fast auto loan facility is quick and can be availed right at the doorsteps. The processing of cases is quick and credit is availed at the shortest duration.
2. Limitations:
Major limitation is the interest component associated with all fast auto loans. An individual availing a particular loan facility might not be aware about the real interest percent he has to pay. He might be told a lower interest rate and charged higher interest rates. Also, easy loan facility has made it possible for loanseekers to successfully obtain large sums, which sometimes makes it difficult to repay the hefty installments. In case of non payment of a particular loan installment at the right time the vehicle financed can be confiscated by the financing firm. Loans of any form are a great liability and are always a kind of limitation.
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