How To Use A Personal Loan For Car Repairs

The majority of personal loans are unsecured forms of credit, meaning the borrower is not required to offer the lender any security in the form of collateral.

Apart from the ease of raising personal loans, there is also the freedom of not disclosing the purpose of raising such loans. Therefore, this makes them a convenient option to fund all kinds of requirements and not necessarily used only in times of financial emergency. One such use is for car repairs.

While one may argue that auto insurance should cover such expenses, however, not all car repairs come under insurance coverage. There are also many cases where the entire billed amount may not be covered by the insurance company under some pretext. In such cases, a personal loan comes in very handy.

If one has a good credit history and relationship with their banks, they can raise the funds within a few hours, without any lengthy explanation on why the car repairs are needed.

Application For A Personal Loan For Car Repairs

Just as for any other personal loan, applying for a personal loan for car repairs is an easy process.

Application:

A borrower needs to apply online on the selected lender’s website or app and fill out all the required details like name, date of birth, address, employment details, and bank account details.

At the time of filing the loan application, the borrower needs to submit basic know-your-customer documents like Aadhaar number, PAN number, income proof (if needed), and proof of address.

Assessment:

Following the submission of these documents, the lender will review the borrower's credit history and CIBIL score to determine whether they are creditworthy and will then extend a loan offer.

Disbursement:

Once the borrower and lender agree on the terms of the loan, including the interest rate and tenure, the money is disbursed to their bank account within a matter of hours.

Repayment:

The repayment process is also very simple, and the loan can be paid back along with interest online in monthly installments.

Interest Rate:

The borrower will probably be given a better interest rate if they have a good credit history and CIBIL score.

Advantages Of A Personal Loan For Car Repairs

Easy to Raise:

Since unsecured personal loans have a higher interest rate, lending institutions like banks and non-banking financial companies are eager to attract more borrowers for these loans and have loosened the eligibility requirements as a result.

Age, credit history, CIBIL score, income documentation, and a few more variables are taken into account throughout the personal loan application procedure. Since the loan is unsecured, lenders use the borrower's credit score, or CIBIL score, to determine their eligibility. Therefore, a higher score makes it easier to get the loan sanctioned even at short notice.

Flexibility Of Use:

The borrower of a personal loan is not required to declare the purpose of the loan or the projected schedule for spending the funds, unlike other targeted loans like a home loan or auto loan. The borrower is free to choose how to use the personal loan which can be easily used for car repairs.

Can Be Obtained As Short Notice:

With the extensive use of online banking, raising a personal loan is also a quick and easy task. The entire process can be done in a paperless manner online and the borrower need not visit any bank branch, as long as all the documents are submitted correctly.

Can Negotiate Lower Rates:

As lenders try and push for personal loans that carry higher interest rates, borrowers can bargain for the lowest rates if they have the necessary paperwork and a solid credit history. Lenders occasionally provide pre-approved personal loans to current customers who have a reliable source of income and a history of timely loan repayment. Because of this, personal loans are an effective solution for car repairs that are not covered by insurance.

Flexible Loan Tenure:

One can opt for a loan tenure that suits them best depending on their monthly income and ability to repay.

Conclusion

A personal loan is a good alternative to fund car repairs if one does not have auto insurance or if a borrower doesn’t have adequate insurance to repair their two- or four-wheeled vehicle.

With the option to pay in installments, personal loans do not put pressure on one’s monthly budget rendering such loans as a good option to fund one’s car repairs.

IIFL Finance, one of India’s biggest NBFCs, offers a fully online process to apply for a personal loan that will allow one to fund the repair of the automobile. IIFL Finance also offers flexible repayment tenure so that one can repay the loan and interest without stretching their financial resources.