Buying a car is a life milestone for everyone who could shell out those huge amounts of money all at once to buy their dream car. With growing times, changing demographics and emerging car loan lenders, for a majority of the people all around the world, owning a car today is no longer a luxury, but in fact a necessity made possible by taking a car loan. Although it is a object of great usefulness but to some extent owning a car has become a status symbol for most people. Hence people are running to buy cars with the newest gizmos. But with newer technologies and lesser resources, the cost of cars are on a rise, often making it extremely difficult for the average individual to purchase their vehicle outright only using ones savings. In today’s world you can buy used car without being looked down upon. You can put up your used car for sale to car dealers or even opt for the online mode for a more direct approach.
One can opt for new or used car loan depending upon the need and the kind of car requirement. Although, most people prefer a car loan over new cars the second hand car price for loans is lesser. Most banks have reasonable EMIs within flexible tenure options to offer on Car loans. Most of the time lenders will be very quick to offer a secured loan even with bad credit, because of the fact that the vehicle is used as collateral if the borrower fails to pay. People with a very low credit rating may be able to take advantage of this loan by paying all the monthly payments on time. By doing this they will be able to begin restoring their credit score. Used car sales have become so prevalent all over the world that the market price for used cars has reached the lowest anyone has ever seen. As a result of this the banks have pulled back on the car loans which they previously shelled out happily. When lenders/ bank repossess cars, they resell the vehicles and use the proceeds from the sale to recover as much of the unpaid balance as possible. However with the decline in the value of used car the lenders are recouping only a smaller share of that balance. As a result the banks have to face an overall loss over the car loans in case the borrower is unable to make his/ her payments. According to global figures banks are recouping only 51% of the unpaid loan balances on average in recent years which previously stood at 65 %.Not only that the banks are estimating a further drop in the loan recoupment to about 30% in the next few years. Thus banks all over the world have restricted the amount they sanction on car loans and some have gone to the extent of putting a halt to the process altogether.
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December 2017
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