Owning a car is not only a necessity for some, but also acts as an indicator of wealth and prosperity in our culture. A car is also seen as an investment for the next 2-4 years, hence everyone looks at owning the latest and the better model available in the market.
Financing Your Purchase of a Car
Generally, when you visit various car dealers to learn more about the features and utilities of features of cars, you should also try to learn more about the various possibilities of financing your purchase, if you are unable to fund the purchase on your funds.
While a car loan is a preferred method of financing the purchase of a car, not many people are aware that a personal loan can also be utilised as a mode of financing your car purchase.
Advantages of Availing a Personal loan for the Purchase of a Car
- Allows 100% Financing
You would understand that a car loan is a secured loan which is secured against your asset (the car). To avail any secured loan, a down-payment is mandatory which may go anywhere from 10 to 25% of the cost of the asset being purchased. So, when you go in for a car loan, you would need to pay a percentage of the cost of the car as a down-payment to show in your commitment.
Further, you would also need to pay expenses like insurance, registration, road tax, etc which is included in the on-road cost of the car. Not all car loans may cover the cost of all these expenses, especially when you are looking for a second-hand car.
However, when you go in for a personal loan for buying a car, you can get a loan for 100% of the cost of the car, including all expenses that include insurance, road tax and registration, etc.
- Saves You the Hassle of Removing the RTO Hypothecation
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. When you pay off the entire loan you can remove the hypothecation.
Removing the hypothecation is a hassle as you would need to gather a few documents like No Objection Certificate from your lender, and a few other documents in support of your full payment of the loan.
But when you have availed a personal loan to purchase a car, there is no need of hypothecation of the asset in the name of the lender. Thus, saving the owner the hassle of removing the hypothecation after the completion of the loan.
- Easy Eligibility Criteria
The eligibility criteria for a car loan may get a little tougher with the requirement for higher income, a particular number of years in employment, income tax returns, etc. But, the eligibility criteria for a personal loan is much relaxed and hence easier to avail.
- Works Well Even on a Low Credit Score
A car loan is a secured loan and comes at a lesser rate of interest than a personal loan. While the personal loan rates come in the interest rate bracket of 10 -36%, a car loan interest rate is much cheaper in the range of 9.25 -20% as the lender has the security of the asset being purchased.
But to be eligible for a lower interest car loan, you need to have a good credit score of at least 700 and above. However, personal loans from online lenders like Money View can be applied to even on lower credit scores.
The minimum credit score requirement for a Money View personal loan is a CIBIL score of 650 and Experian Score or 750.
- Instant Disbursement
The documents required for a car loan are much more than a personal loan and therefore takes longer for disbursement. So 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 documentation needs are minimal. Which in turns means that the processing time gets quicker. Money View instant loans are disbursed in a matter of 2 business hours from the time of approval.
- Can be used to buy a pre-owned car
There are a lot of loan options for a new car loan. However, when it comes to a pre-owned or a used car, the loan options get quite limited. This is because of the valuation issues associated with a used car.
But, a personal loan can be utilised for any purpose that you wish without being asked any questions. So, a personal loan becomes the loan of choice when looking to buy a second-hand car.
Documentation for Buying a Car on a Personal Loan
A personal loan works perfectly fine for buying a car, especially when you have a lower credit score, looking for faster disbursal of loans and want 100% on-road financing.
Money View instant personal loans make the perfect fit for a personal loan which can be used for buying a car.
The documentation needed for this personal loan is quite simple and minimal.
Documents Required for Applying for a Money View Instant Personal Loans
|ID Proof (Any one of the following)||
|ID Proof (Any one of the following)||
|Income Proof (for self-employed)||Last 3 months’ bank statement (in PDF format) or last 2 years’ ITR|
|Income Proof (for salaried)||Last 3 months’ bank statement (in PDF format)|
Eligibility Conditions for a Money View Personal Loan to Buy a Car
Money View 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 most transparent and simple to understand.
The basic eligibility conditions for availing a personal loan to buy a dream car of your own are
- Be salaried or self-employed
- A Monthly in-hand income of ₹13,500* or more
- Income should be received in a bank
- Min Cibil score of 650 or Experian score of 750
- Should be aged between 21 years and 57 years
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Tax Benefits on a Car Loan
Unlike a home loan or an educational loan, there are no tax benefits available on the interest payment of a normal car loan.
- Tax Exemption for a Car Loan for an Electric Vehicle
To promote the usage of electric vehicles, the Union Budget of 2019-20 allowed an exemption of up to Rs 1.5 lakh towards the interest paid on car loan availed for the purchase of an electric vehicle. This benefit can be availed only by individuals.
- Tax Exemption for Car Loan used for Business Purpose
However, if you own a business and the car bought out a personal loan is used for the business purpose then you can claim the interest paid on it as a deductible business expense. This deduction is available, irrespective of the category of the vehicle (EV or Non-EV)