Today, a car purchase is indeed costly. Many people do not have enough money to pay the full amount at once. Car finance becomes useful in such cases. Through it, you can buy the car by paying in instalments over time. A very well-liked option is to pledge your car as collateral for the loan.

Continue reading to learn the top five reasons why you should pledge a car on finance (รับจำนำรถยนต์ติดไฟแนนซ์, which is the term in Thai).

Easier Loan Approval

When you pledge your car as security, lenders regard you as a lower-risk borrower. This is because if you don’t repay the loan, they can seize and sell your car to get back their money.

Through collateral that the lenders can use to ensure that you will repay the loan, they have a higher chance of approving your application. Regardless of poor credit scores, your car financing can still get approved.

Lower Interest Rates

Securing loans like car finance often have lower interest rates than unsecured loans. The lender’s risk is reduced as the collateral acts as a security.

Through a car pledge, you will be able to get better interest rates, which will be much cheaper. Over the loan tenure, thanks to this, a lot of savings on the interest payments are made.

Higher Loan Amounts

The amount of loan that you can take is the result of factors like your income and your credit score. Car owners who pledge their cars as collateral are considered to be safer borrowers.

They might be ready to loan you more than you could get with an unsecured loan. The fact that car buying is allowed flexibly enables you to buy a more expensive or better car.

Flexible Repayment Terms

When you pledge your car for financing, lenders provide more flexibility in the repayment terms. You can pick a loan period that fits your budget and financial situation.

The longer the tenure, the lower the monthly instalments, which in turn makes repayment easier to handle. Shorter tenures enable you to be debt-free earlier, although the monthly payments are higher.

Owning The Car Sooner

With traditional car loans, you become the owner of the car after fully repaying the loan. Nevertheless, when you pledge your car for financing, you become the owner immediately.

The lender has the car as security, but you have owned it since the day you bought it. This can be beneficial if you intend to sell or trade in the car before the loan is paid off.

Thus, pledging your car as collateral for a finance loan comes with several advantages. It raises your chances of getting the loan approved, allows you to avail lower interest rates and higher loan amounts, offers you flexibility in repayment terms and you can own the car earlier.

If you’re thinking of car financing, pledging your car can be a good choice, as long as you can pay back the money on time.