Apart from being a status symbol, a car can really make your life easier as you don’t have to depend on public transport to commute. You can also use it for road trips with your family and friends.

A car is also seen as an investment for 2-4 years, hence everyone wants to select the latest model available in the market.

Financing the Purchase of a Car

While choosing a car based on your needs, its features, and utilities, also consider various methods of financing it. It is a good idea to look into various car loans to compare and find out car loan interest rates, repayment terms, and any other charges.

If you are looking to purchase a pre-owned car, you can also avail of a used car loan. But car loans are not the only way to finance the purchase of your vehicle. You can also opt for personal loans for the same.

Advantages of Availing a Personal Loan for the Purchase of a Car

When searching for ‘lowest car loan interest rates’ and ‘used car loans’, also consider looking into the benefits a personal loan can provide. Here are some of the benefits a personal loan has over a car loan - 

A car loan is a secured loan that is secured against your asset, which is the vehicle in this case. To avail of any secured loan, a down payment is mandatory which may go anywhere from 10 to 25% of the cost of the asset being purchased.

Apart from this, you would also need to pay expenses like insurance, registration, road tax, etc. which are included in the on-road cost of the car. Not all car loans may cover the cost of all these expenses, especially when you opt for a used car loan.

On the other hand, a personal loan does not have these limitations. You can get a loan for 100% of the price of the car, including other expenses like insurance, road tax, registration, etc.

When you buy a car with the aid of a car loan, the asset remains hypothecated to the lender till the loan is cleared off in full. You can remove the hypothecation after paying off the entire loan amount.

It can be a hassle as you would need to gather a No Objection Certificate from your lender, and a few other documents which will prove your full payment of the loan.

However, if you use a personal loan to purchase a car, there is no need for hypothecation of the asset in the name of the lender. The car is under your name from day one. This saves you from the hassle of removing the hypothecation after the completion of the loan.

The eligibility criteria for a car loan might be a little difficult to meet as lenders might require a higher income, a particular number of years in employment, income tax returns, etc. 

Whereas the eligibility criteria for personal loans are much relaxed, which makes them more accessible.

Car loan interest rates are generally lower than those of personal loans as the former are secured loans. Personal loan interest rates start from 10%, whereas car loan interest rates start from 8.75%.

But to be eligible for the lowest car loan interest rate, you will also need to have a high credit score. A credit score of at least 700 or 750 is preferred by most lenders for car loans.

This will not pose a problem if you opt for a personal loan. Online lenders like moneyview offer loans even if you have a CIBIL or Experian score of 650.

Car loans have longer processes of application as well as require a lot of documents. This means that your wait to drive home sooner may have to wait depending upon the time taken to disburse the loan.

On the other hand, with an online personal loan, the documents required are minimal. This, in turn, means that the processing time is shorter. Instant personal loans from moneyview are disbursed within 24 hours of submitting the loan agreement in most cases.

Getting a car loan to purchase a new car is quite easy, but getting a used car loan might be a little difficult based on the condition of the vehicle. This is because of the valuation issues associated with a used car.

You can bypass that difficulty if you opt for a personal loan, as the funds can be used for any purpose. So, a personal loan can be a great choice when looking to buy a second-hand car.

Also Read: Use Personal Loan to Buy Second Hand Cars

A personal loan works perfectly fine for buying a car, especially when you have a lower credit score, and are looking for fast disbursal as well as want 100% on-road financing.

In such cases, instant personal loans from moneyview can be a great choice for you. Even the documentation required for procuring a personal loan from moneyview is very simple. All you will have to do is - 

  • Confirm or enter your PAN number 
  • Ensure that your mobile number is linked to your Aadhaar card for KYC verification
  • Provide a clear selfie taken in a well-lit area 

Please note that the documentation requirements will vary based on your profile. You may be required to upload proof of address, bank statement, and other supporting documents. 

In case you are required to upload proof of address, any one of the following documents will suffice - 

  • Aadhaar Card
  • Valid Indian Passport
  • Valid Voter ID
  • Valid Driver’s License
  • Utility Bills (Electricity, Water, Gas) dated within the last 60 days 

In case you are required to upload proof of income, you must furnish your bank statement for the last three months. This statement must also show your salary credits.

moneyview loans are designed with a view to ensuring that more and more individuals have access to credit (personal loans) when they need it. Therefore our eligibility conditions are very inclusive and transparent.

To be eligible for a personal loan from moneyview, you need to fulfill the following criteria -

  • Should be aged between 21 years and 57 years
  • A monthly in-hand income of Rs.13,500 or more if you are salaried
  • A monthly in-hand income of Rs.15,000 or more if you are self-employed
  • Income should be directly credited to your bank account
  • Minimum CIBIL or Experian score of 650

Unlike a home loan or an educational loan, there are no tax benefits available on the interest payment of a normal car loan. But there are some special cases where you can avail of tax benefits on the purchase of a car.

  • Tax Exemption for a Car Loan for an Electric Vehicle

    To promote the usage of electric vehicles, the Union Budget of 2019-20 announced an exemption of up to Rs.1.5 Lakh under Section 80EEB of the Income Tax Act. This can be availed towards the interest paid on car loans that have been taken to purchase an electric vehicle. Also, this benefit can be availed only by individuals.

  • Tax Exemption for Car Loan used for Business Purpose

    In case you have purchased a car for business purposes, you have the option to claim the interest paid on it as a deductible business expense. This deduction is available for both electric and non-electric vehicles.

Conclusion

Having your own vehicle makes things a lot easier, but they are expensive. Most people look for financing options to purchase a car. Even if you want to buy a pre-owned car, you can get used car loans at competitive rates.

Just like you would research well into the model and make of the car you are about to purchase, you should also look at various lenders that provide car loans. That way you will be able to compare and find out the lowest car loan interest rate. 

In case you are considering taking a personal loan instead of a car loan or a used car loan, you can opt for moneyview instant personal loans. With moneyview, you can get the loan disbursed within 24 hours and the application process is also very easy.

To know more, visit the moneyview website or download the app.

Personal Loan for Car - Related FAQs

Yes, you can. Funds from a personal loan are versatile and can be used for anything.

No, car loans are not cheaper than home loans. 

Car loan interest rates at HDFC Bank start at 8.85%. But the final interest rate offered to you depends on your income, credit score, and debt-to-income ratio.

You can calculate your EMI depending on factors like the repayment tenure and the interest rate. Let’s say you take a car loan at a 10% rate of interest for 5 years. Then your EMI will be Rs.21,247.

Yes, you can most definitely buy a car without a loan if you have the funds to finance it by yourself.

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