Car loan or Car overdraft
The car overdraft is essentially a secured loan like a home mortgage loanApnaloan.com Research Bureau
22 Jan 2008
The car overdraft or the overdraft against car is essentially a secured loan like a home mortgage loan. It allows you to take a loan on your existing car, by pledging the car registration papers with the lender.
There is a difference between the traditional car loan and the car overdraft - The former is used to purchase a car while the latter is typically an instrument to raise money for a sudden money requirement by pledging a car you already own.
Just like a personal loan, there is no restriction on the end-use of a car overdraft.
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Car loan
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Car overdraft |
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Interest calculated on monthly reducing balance basis |
Interest charged on daily reducing balance basis only on the amount used |
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Loan amount up to 80-95 per cent of the actual car value |
Loan amount up to 90 per cent of the value of the car |
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Loan given for a 5-7 years |
Loan given for a period of 1 year |
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Used to purchase a car |
Used to raise money by pledging a car |