A loan secured by a car: who can take out a loan + no rights: what to do? + advantages and disadvantages of a car pawnshop + analogues + choice of a pawnshop: what you should pay attention to.
Sometimes life situations that are simply impossible to predict require an urgent and timely financial decision, while the option with a regular bank loan or any other financial institution is not always possible or preferable.
A loan secured by a car, or car pawnshop, is a popular and quick option for financial assistance by transferring your own vehicle on security.
In addition to the usual cars, other vehicles can act as collateral – motorcycles, buses, trucks, special, aviation and hydraulic engineering.
Today we will talk about such a phenomenon as a car pawnshop, tell you where and how to take out a loan secured by a car, and also consider the most interesting offers for a car loan in banks in Russia and the CIS.
Who and how can take out a loan secured by a car?
A loan at a car pawnshop is available to all adult borrowers who own a car, in addition, the following requirements may be imposed on vehicles:
- the car is completely cleared by customs;
- The vehicle is not associated with crime, is not arrested, is not listed in theft;
- if the car was purchased in installments, then the loan must be completely closed;
- borrower age – from reaching the age of majority to 65-70 years;
- with rare exceptions, the car is not seriously damaged;
- acceptable service life (on average, up to 20 years), mileage;
- issued in any traffic police of the Russian Federation.
Based on the assessment of the market value of the car, the lender can provide the borrower with an amount from 20 to 70-80% of the market value of the vehicle.
After checking all the necessary documentation, the lender assigns an interest rate to the borrower, which is calculated from the following parameters:
- the cost of vehicles, market;
- the original price of the car;
- vehicle age, mileage traveled;
- general deterioration of mechanisms;
- relevance of technology in the car market;
- the term for which the loan is provided.
At the same time, other nuances can be taken into account in individual car pawnshops: insurance of a vehicle during storage, savings costs, additional costs for maintaining a car involved, etc.
Car pawnshop as a business: a detailed plan of action
How is the loan issued?
As a rule, there are 3 types of services provided among auto lenders:
Leaving his car on bail, the borrower does not have to worry about its safety – the lender assumes all the obligations to protect and insure the car, and after the full repayment of the loan issued by him, the car will be returned to the ownership of the car owner in full safety.
Please note: sometimes a situation may arise when the borrower wants to get a cash loan secured by a car, but does not have the rights to the vehicle itself, or the car belongs to another owner.
Most car pawnshops refuse to issue a loan to borrowers who do not have the necessary documents for a car, however, if he has written permission from the owner, or any other notarized paper, the chances of issuing a loan for a vehicle without a license increases.
Advantages and disadvantages of a loan secured by a car
A loan at a car pawnshop is not the only way to quickly and relatively easily get a cash loan; in addition to it, there are dozens of other options. In order to understand exactly whether it is worth resorting to the services of a pawnshop, we will consider their main advantages and disadvantages.
|1. Registration of a loan in a car pawnshop is much faster than in similar banking financial structures. As a rule, the car owner is immediately told the cost of his car, and the entire procedure for obtaining a car loan takes from 30 to 120 minutes.||1. With a quick loan, the borrower does not have enough time to familiarize himself with the agreement, which in the event of a dispute may benefit the company.|
|2. To obtain a cash loan, it is enough to present papers confirming the identity of the borrower, as well as the vehicle registration certificate. If the borrower is not the owner of the vehicle, the lender has every right to request additional extracts, for example, the permission of the effective owner to hand over the car to the pawnshop.||2. As a rule, credit offices do not evaluate the borrower’s car higher than 50-60% of its market value; as a result, an amount is given out on hand, not particularly more than 50% of the real market value of the car.|
|3. Depending on the appraisal of the car, the borrower can make payments on the loan at any predetermined date.||3. The interest rate of the collateral is significantly higher than in other financial structures. So, Sberbank gives out a loan secured by a car for 2.3% monthly, car pawnshops – from 4-5% to 15% per month, therefore long-term loans in such offices are the most financially impractical option.|
|4. Unlike banks, pawnshops cannot keep track of where the client spends targeted funds, and the reason given for the loan does not always correspond to the actual expenses.||4. Having missed at least one monthly payment, the pawnshop has the right to increase the already high percentage.|
|5. When issuing a loan, the lender does not send a request to the borrower’s place of work, does not require a statement on the amount of income, place of registration, credit history.||5. In case of regular violation of the terms of payments, the company has every right to demand a full refund of the funds issued under the loan plus compensation, while it can also start legal proceedings.|
|6. Motor vehicles, left on bail, help to avoid the involvement of guarantors, lawyers and other strangers.||6. In the event that the repayment period has been exceeded by more than 30 calendar days, the creditor company may confiscate the vehicle left on bail.|
|7. Depending on the wishes of the car owner, some pawnshops can sell the abandoned car, often with mutual benefit.||7. There are credit companies that are not responsible for the collateral left outside the territory of a pre-agreed place.|
|8. If necessary, the lender can easily extend the term of the loan agreement.|
Car pawnshop analogs
Depending on the company from which the borrower will receive the loan, some of the above advantages or disadvantages may vary. Among banks, a loan secured by a car is a rare phenomenon, but not unique.
For example, in Tinkoff, a loan secured by a car is issued in the amount of up to 3 million rubles, while in ordinary pawnshops it rarely exceeds 500-600 thousand rubles, but the average interest rate is much higher than in car pawnshops, and exceeds 11% monthly.
As with the pawnshop, Tinkoff Bank does not check the income of borrowers, does not send a request for official employment and income, and is not limited to the classification and purpose of the vehicle.
In addition to a larger amount, a slightly longer loan processing time and the same interest rate, the car pawnshop from banks is practically no different from loans in other specialized companies. And yet there is one difference – often banks do not take away the TCP, but allow the owner to use it.
On the one hand, such a decision may seem convenient, on the other hand, the likelihood of damage or loss of the car increases, which entails not only an increase in loan payments, but also the likelihood of litigation with the bank.
There are other variants of pawnshops, with much more striking differences. So, Sovcombank issues a loan secured by a car to individuals who have reached the age of 20, requires official employment from the borrower, a passport of a citizen of the Russian Federation, a contact phone number, etc.
As you can see, comparing the conditions of Sovcombank and an ordinary car pawnshop, one can understand that the first option completely and completely loses from the pawnshop-creditor. As for Tinkoff Bank, the terms of cooperation look a little better than with the second option, however, they are inferior to car pawnshops in terms of the convenience and timeliness of the loan.
A loan secured by a car:
What you should pay attention to?
Taking out a loan secured by a car, the borrower risks not only his payment means, but also material property. Therefore, when choosing an office to receive a loan, the car owner should pay attention to the following points:
What documents are needed for a loan at Sberbank
Pledge without the ability to use the vehicle.
When applying for a loan without permission to use a car, the borrower must indicate all the conditions for storing his car, write out all existing cosmetic and structural damage, unique housing defects, assess the condition of important components and assemblies, and mileage.
When drawing up a contract, it is worth paying special attention to the individual, from whose side the act of acceptance of the property was signed. According to the agreement, it is they who are responsible for saving transport.
Early repayment of the loan.
It often happens that the owner of the car is ready to close the loan in advance, therefore, before concluding a contract, he needs to clarify all points of interest to him with the creditor company. If the possibility of early repayment is provided, the car owner must clarify the repayment amount and the interest rate of the loan.
Car pawnshops often try to make money by selling additional services. The car owner should clarify whether car storage, appraisal of its value and insurance is a paid service or not.
Familiarization with the loan agreement.
Careful acquaintance with the agreement is the key moment of any credit cooperation. The borrower must check the state registration number of the company, and give preference to firms with a positive profile.
Before the very conclusion, I would like to summarize the general statistics of car pawnshops. In short, the numbers are as follows:
- the release date of the car plays an important role – if the car is assembled before the beginning of 2000, the car owner will receive no more than 10-20% of the car’s market value;
- some companies even refuse to take a car over 20 years old, regardless of the mileage;
- as a rule, the minimum term for a loan is 2-3 months;
- the borrower rarely receives more than 70% of the market value of the car;
- if the car owner plans to further resell the transport, credit offices value trucks and special equipment most of all;
- broken cars are accepted for ransom, their interest rate is lower than usual (from 2.1%), but such a car is rarely valued at more than 10% of its value;
- in case of late payment of the rate, the pawnshop may confiscate the car, however, the total percentage of confiscated in the CIS does not exceed 13%;
- the maximum loan amount almost never exceeds 600 thousand rubles.
Of course, a loan secured by a car is a fairly quick and easy way to get the required amount, while practically no documents are required from the borrower.
However, before making such a decision, you should think carefully, carefully weighing the pros and cons. It often happens that a contract that looks smooth on paper turns out to be completely different in practice.
In other words, this method is applicable only as a last resort, if you have other alternatives – choose them. If you nevertheless decide to conclude an agreement with a car pawnshop, remember about the “pitfalls” of such a business: double contracts, a small amount for a loan, high rates, the inability to use a vehicle.