Personal Loans Vs Car Loans - Which is the Best one for You?
A car has become a basic necessity for a family, given the conditions of public transport and last-mile connectivity in Indian towns and cities. Moreover, a car is also considered as a status symbol in our culture. No matter what is your reason for buying a car- new or second-hand, finance in terms of loans is a requirement for many individuals.
With the number of varieties of loans available, we understand that you might be confused over personal loan vs car loans and which one you should ideally choose.
Let us go through the various features of a personal loan and a car loan that can help you better to make the right decision.
Important Features of a Personal Loan
- They are unsecured loans
- Short term in tenure
- Amounts can vary between Rs 5000 to Rs 40 lakhs
- No need for providing any collateral to avail the loan
- Available from various lenders like online lenders, banks and NBFCs
- Simple documentation
- Higher interest rates in comparison to a secured loan
- Can be used for any purpose
Important Features of a Car Loan
- Can be availed only for the purchase of a car
- The car purchased is considered as collateral for the loan
- Ownership of the car remains with the lender till full repayment of the loan
- The amount is restricted to 80-90% of the cost of the car
- A down payment to the tune of 10-20% of the cost of the car is required
- Tenure can go up to 7years
- Can be availed with a lower credit score as it is a secured loan
- Available from banks and NBFCs
- Higher documentation needs
These were the individual features of personal loan and a car loan. But we will need to compare the pros and cons of personal loan vs car loans for the purchase of a car to be able to come at the right decision.
Advantages of a Personal Loan Vs a Car Loan for the Purchase of a Car
A personal loan undoubtedly comes with a lot of benefits but is it the best option of finance when it comes to purchasing a car? Let’s explore!
- Available without a Downpayment:
There is no requirement of a down payment when you are looking to purchase a car through a personal loan. You can go in for a loan for 100% of the cost of the car. In addition, a personal loan can also save you the trouble of making arrangements for the down-payment of the loan.
- Personal loans are Available Online:
Personal loans from online lenders are available easily online, which can be availed over their website or app without much of a hassle. However, to avail a car loan, you would still have to approach a bank or an NBFC where you would have to apply through the usual offline method.
- Ownership of the Car Remains with You:
With a personal loan, there are no conditions of hypothecating the vehicle with the lender or submitting proof of purchase. This ensures that you get the ownership of the vehicle from day 1. This would help you avoid the hassles of removal of hypothecation at the end of the loan period in case of a car loan. It might also be helpful in case of a sale of the vehicle.
- Minimal Documentation:
A personal loan does not need extensive documentation. All you need to submit are proofs of address, identity and income. With online lenders, the entire process of document submission happens online which makes it easier for applicants to avail of a personal loan against a car loan which can have varied document requirements like bank statements, income tax returns, etc.
- Can be Used for the Purchase of a Second-Hand Car:
Most of the car loans available in the market are for the purchase of a new car, however, second-hand car financing is hard to come by. But a personal loan can be easily used for the purchase of any car.
Advantages of Availing a Car Loan for Purchase of a Car
- Car loans are Available for Bigger Amounts:
Personal loans are unsecured in nature, hence can be restrictive when it comes to the amount of loan that can be availed. However, a car could cost anywhere between a few lakhs to a few crores depending upon the model you are interested in buying. Car loans are not restricted by the amount, hence may prove useful especially when you are looking at a high-value car.
- Carry Lower Rates of Interest:
As car loans are secured loans, they are less riskier for the lender. So when you compare the interest rate of car loan vs a personal loan, the car loan comes at a lower rate of interest than a personal loan.
- Can be Availed on a Lower Credit Score:
Car loans are secured loans, hence these loans can be availed on a lower credit score. On the other hand, the credit score requirement for a personal loan is high.
- Higher Tenured Loan:
Car loans can be availed for a longer period of time in comparison to a personal loan. Car loans allow extended tenures for 7-8 loans in comparison to a maximum of 5 years for a personal loan.
The comparison of personal loans vs car loans may look difficult as both the loans come with their advantages. However, each loan may suit an individual depending upon the needs and other financial commitments.
How can Money View Instant Personal Loan help you Purchase a New or 2nd Hand Car?
Money View personal loans are easy loans that you can avail online from the comfort of your home or office. Some of the important features of the loan that makes it the best choice for the purchase of a car are:
- Quick Eligibility Check –
Learn about your eligibility on our website or app in 2 minutes and get cash in your bank account 24 hours. So you can go out and get your car without waiting for paperwork or approval from your bank.
- Entirely Paperless –
From documentation to verification, our entire loan application process is fully digital.
- In-House Credit Assessment Model –
No or low credit? No problem. With our alternate credit model, you can still get a loan
- Anywhere in India –
Borrow money wherever you’re in India – all you need to do is apply online
- Pocket-friendly Interest Rate -
Our interest rates are one of the most pocket-friendly ones starting at 1.33% month. The processing fees for our loans range between 2.5 -6% of the loan amount.
- Zero Prepayment Penalty:
We do not charge prepayment penalty on our loans as long as you are prepaying your loans after a minimum of 3 EMIs.
Do you need more information or assistance in getting a personal loan from Money View? Please write to us at firstname.lastname@example.org or call us at 080 4569 2002.