What is a car mortgage loan? 7+ important things to understand

1. What is a car mortgage loan?

A car mortgage loan is a form of loan at a bank, using a car owned by the borrower as collateral. In other words, you will use the car you own to borrow money from the bank. The loan amount will depend on the value of the car after a thorough appraisal by the bank. At the due date, the customer must be responsible for paying the full principal and interest as agreed with the bank. Customers can use both old and new cars as collateral.

2. Benefits of a car mortgage loan

A car mortgage loan is a form of mortgage loan that is safe and brings many benefits to the borrower. Specifically:

• Access loans with preferential interest rates: A car mortgage loan is a form of mortgage loan (loan with secured assets), so the interest rate will be more favorable than other forms of unsecured loans. This helps you save a significant amount of money.
• Long loan term: Compared to other forms of short-term loans, car mortgage terms are usually longer, up to 5-7 years. This helps you break the loan into smaller monthly installments, reducing financial pressure. 
• Large loan limit: Car mortgage loan has a large limit, which can be up to 70% - 100% of the car value, helping you access a large loan amount to do business or improve your quality of life. 

3. Loan conditions

Loan conditions depend on each bank's regulations. Normally, banks will stipulate the following conditions:

• Customers are 18 years of age or older and no more than 70 years old at the time of loan.
• Vietnamese nationality and living and working in Vietnam.
• Provide a stable source of income to ensure solvency.
• There are no bad debts at credit institutions.
• The original vehicle belongs to the legal ownership of the customer.
• The vehicle's age must not exceed 5-7 years from the time of registration depending on the bank's policy.

4. Car mortgage loan documents

To get a car mortgage loan approved quickly, you need to fully prepare the following documents: 

Personal profile:

• ID card/Citizen identification card/Passport that is still legally valid: This is the most important document to verify your identity.
• Household registration/Temporary residence book/Confirmation of residence information...: These documents help verify where you live so the bank can send documents and contact you when needed.
• Marriage registration/Divorce decision/Confirmation of marital status: This document shows your marital status, from which the bank will assess your financial ability and responsibility.

Financial profile: 

• Labor contract: This document proves that you are working at a certain company and your salary.
• Salary account statement: This document shows your trading history and stable income level over a certain period.
• House/car rental contract...: These documents can be considered as evidence of your additional source of income.

These are basic documents that help banks evaluate the borrower's ability to repay debt. However, depending on regulations from time to time, some banks may require customers to provide additional financial documents.

Collateral records

• Vehicle purchase and sale contract: This is a document proving that you are the owner of the car mortgaged to the bank.
• Some other documents are required according to bank regulations. 

5. Car mortgage loan process

The car mortgage loan process usually goes through the following steps: 

Step 1: The bank receives the application

The bank will receive the documents that the customer has prepared. After that, the bank checks and verifies the information according to the records provided by the customer.

Step 2: The bank processes the application and makes a decision

The bank will conduct an appraisal of your entire profile, including personal information, financial capacity, and collateral value. Based on the appraisal results, the bank will decide whether to approve you for a loan or not. 

Step 3: Decide on a loan

• In case the customer's profile is valid: The customer and the bank sign a car mortgage loan contract.
• In case the customer's profile is not valid: The bank will ask you to add additional necessary documents.

Step 4: Disbursement

The bank disburses the loan in the form you have chosen (transfer to account or receive cash).

6. Some notes to know when borrowing a car mortgage

A car mortgage loan is an ideal financial solution when you need a large capital. However, you need to keep in mind the following issues when borrowing a car mortgage: 

• Prioritize short-term loans: Short loan periods help you reduce the total amount of interest you have to pay, and at the same time create motivation for you to repay debt faster. However, a loan term that is too short can also cause financial pressure. You should consider carefully to choosing a loan term that suits your financial ability.
• Balance income to ensure solvency: Before deciding to borrow, you need to carefully balance your income and other expenses to ensure that you can afford to repay the loan monthly. If you are not well balanced, you may fall into debt and have difficulty repaying it.
• Disbursement time: About 3 - 5 days when the bank receives all documents. Therefore, if you need capital urgently, you should complete the complete application quickly as required. 
• You can still drive the car when the bank holds the car's documents as collateral: The bank will keep your car documents as collateral, but you can still use the car as usual. You need to make sure to maintain your vehicle well to avoid unnecessary risks.
• Choose a reputable bank: Choosing a reputable bank will help you feel more secure about the quality of service and terms in the loan contract. You should learn about the bank's reputation, interest rates, fees, processing time and accompanying services before deciding.

7. Vay thế chấp ô tô SeABank lãi suất ưu đãi, thủ tục dễ dàng

7. SeABank car mortgage loan with preferential interest rates and easy procedures

SeABank is one of the largest and prestigious joint stock commercial banks in Vietnam. The bank is implementing car mortgage loan packages with preferential interest rates and simple procedures. 

• Condition: Individuals with Vietnamese or foreign nationality who meet the conditions prescribed by SeABank (usually have stable income, good credit history).
• Procedure: 
• Loan application form: According to SeABank's form
• Legal documents: identification documents, household registration book, marriage registration...
• Documents proving the purpose of capital use: Car purchase contract, VA invoice,…
• Documents proving financial capacity and source of debt repayment
• Collateral records
• Other documents
• Limit: Minimum 50,000,000 VND, maximum 1.5 billion VND with a loan rate up to 75% of vehicle value. 
• Loan term: Maximum 96 months
• Fast disbursement: Notification of credit issuance within about 4 hours after receiving complete documents, and disbursement time from 3 - 7 working days.
• Interest rate: Promotions help customers save money effectively. 

8. Frequently asked questions

Below are answers to some common questions customers have about car mortgage loans to help you better understand this service: 

1. What factors will the car mortgage loan limit depend on?

The car mortgage loan limit will depend on the type of car:

• Old cars: The loan limit can be up to 100% of the car's value, depending on the condition and age of the car. However, usually, banks will lend about 80-90% of the car's value after appraisal.
• New cars: Maximum loan limit is about 50-70% of car value. The reason is that the value of new cars decreases faster than used cars, so banks will be more cautious in lending.

2. What is the car mortgage interest rate?

The car loan interest rate on the market ranges from 9-11%/year (reference interest rate, can change according to the financial market) during the incentive period. However, after the preferential period, interest rates may increase.

Factors affecting loan interest rates

• Market situation: The state bank's base interest rate, inflation, and the general economic situation will directly affect lending interest rates.
• Bank policy: Each bank has different lending policies, which also affect interest rates.
• Customer credit history: Customers with ga ood credit history often enjoy more preferential interest rates.

3. How long is the car mortgage loan term?

Car mortgage loan terms will usually be shorter than many other mortgage solutions. Normally, the loan term ranges from 5 - 7 years depending on the value of the car after appraisal by the bank.

4. What are the fees paid when borrowing a car mortgage at a bank?

In addition to interest, customers also have to pay several fees, such as:

• Appraisal fee: Fee for the bank to assess the value of the car.
• Insurance fee: Insurance fee for mortgaged property.
• Contract registration fee: Fees to complete loan procedures.
• Early repayment fee: If the customer wants to repay the loan early, they may have to pay a penalty fee.

5. What methods do banks use to value cars?

Banks will use many methods to value your car, the most common of which are:

• Market comparison method: Compare the prices of cars of the same type and year on the market to give an estimated value.
• Asset depreciation method: Calculate the value of the car decreasing over time of use.

Above are the things you need to know when car mortgage loan. Hopefully this information will help you get a safe loan with preferential interest rates. The most important factor is that you need to choose a reputable bank to implement a loan package with optimal benefits and effective use of capital. 

If you If you want to learn more about SeABank's loan packages, you can contact the nearest transaction points or call Hotline 1900 555 587 or visit the website. www.seabank.com.vn for more detailed information.