Collateral or pledging is like a security to the loan you have acquired to buy your dream vehicle. Instead of wasting time at the bank and paying several visits for the loan to sanction, you get the car in return to an asset you leave with the bank as a security.
In simple terms, it means if you fail to repay the car loan on time, the company or the bank would recover the money by taking possession of the collateral.
Some of the common questions raised by people related to collaterals are as follows:
- Can I buy a car loan against my car itself?
Yes, in many cases it is possible. Some banks offer you loans against your car and during loan payment failure, the bank or the company would take back the car’s possession from you.
- How is it possible to acquire car on the basis of a collateral loan?
When the company offers you a car of your choice, the company first takes out the current value of the car in the market. Then they compare the car’s rate with the asset that you wish to give to the bank as the security. If the asset is more or equal to the amount of the car loan, you are given the possession of the car.
- How is pledging for the car possible?
Once you have the car pledge[รับจํานํารถ, which is the term in Thai], you cannot sell it further until the loan is repaid. Until then, your asset is taken as a security in return to the car.
If you are planning to acquire a car loan, you must check all the requirements, qualifications, and formalities attached to pledging. Once you are aware of the basics, getting your favourite car would not be difficult anymore. Make a list of queries to ask your car company too.