Unsecured car loans are the types of loans, which provide the requisite amount to people for vehicle purchase but do not include any collateral. This means that unlike the conventional auto loans, these unsecured financing schemes do not require the vehicle to submitted and confiscated in case of no-repayment. Unsecured car loans can simply be described as making a major purchase through the credit card and then opting for monthly instalments. If the monthly instalments for that particular product stop coming, then the concerned person will be suffering from bad credit score but the product will not be confiscated by the loan source. Similarly, the unsecured auto loans do not keep the vehicle being purchased as a security and in case of failure of payments, the person's bad credit report is generated by the financing firm.
Car loans in India are offered by almost all the domestic and global auto manufacturers, who are in collaboration with other financing firms. This type of conventional financing system is still considered an ideal choice for a majority of prospective buyers but a considerable number of users also tend to go for unsecured auto loans. The chief reason for the same is that in the latter process, no vehicle collateral is involved and no worthy object is kept for security. If people want to buy new cars or used models and do not have any collateral to put against the loan amount, this type of financing scheme is highly beneficial for them. The unsecured car loans include quick approval and much flexible interest rate, which can be negotiated with the consent of the concerned parties. Depending upon the lender, one can find unsecured loans including clauses, which allow people to have the convenience of repaying the amount as long as they are financially stable.
A number of corporation banks and firms providing car loans in India also cater to the needs of people in search of unsecured financing. To avail the benefits of this type of loan, all people have to keep in mind is that their credit score has to be on a good scale. It should not let the lender be worried that the borrower is financially handicapped and is incapable of returning the amount. If the credit score of an individual are satisfying, then they can go for a number of small-time lenders, which are available in the domestic market as well as a number of portals. These lenders require the borrowers to also possess a stable income source, through which they can ensure that the instalments will be made on regular basis.
The interest rates for unsecured loans can start from a steep 10 percent, which is way higher than the rate offered in conventional car loans. People should, therefore, properly evaluate the rate of interest they can pay each month and should cross-check the different rates offered by various lenders. It is always suggested that one should opt for a vehicle, be it used cars or new automobiles, as per their budget. The car prices only decide the amount to be lent in case of unsecured financing schemes. The loan amount is generally low as against the normal type of car loans in India and the same can be negotiated with the concerned financing unions.
