Reasons to Choose a Personal Loan to Buy a Car

Dec 29th 2023
Loan
Why Choose a Personal Loan to Buy a Car

Reasons to Choose a Personal Loan to Buy a Car, Are you looking to buy a car for your family? There is no doubt that a car has become a necessity in today’s fast-paced life and it is no longer a luxury item. Whether it is taking family to a vacation, commuting to office regularly, spending weekends on a distant beach or hill station, or picking up clients from the airport, a car brings tremendous value to our lives. Now, when it comes to buying a car, a car loan emerges as the best choice to finance this big-value purchase. Is there are other option rather than a car loan to buy a car loan? Can I take a personal loan to buy a car? Would it be a sensible decision? You will get to know the answers to these questions in the following part of this post.

Why Choose a Personal Loan to Buy a Car?

Choosing a personal loan to buy a car offers the advantage of receiving a deposited amount directly into your bank account. This unsecured credit facility, provided by banks and lenders, eliminates the need for borrowers to pledge any collateral or security. A personal loan is flexible because you can use the borrowed money for anything without the lender asking questions.

Major Reasons Why Taking a Personal Loan is a Good Decision for Car Buying

1. No restriction on usage –

Contrary to car loans, that can only be used to finance a car, you can use a personal loan for any purpose including car buying. For a car buyer, a personal loan could help him cover several other costs like vehicle customization, taxes, accessories, and insurance liabilities.

2. Easy availability –

In today’s fast-paced global environment, obtaining a personal loan is quite easier as there are lots of banks and financial institutions available that offer unmatched offer on personal loans. Even, you can apply for a personal loan online and expect to get the amount within a few hours after approval. However, you must ned to have a good credit score to avail a personal loan.

Your auto loan will be approved by the lender really quickly. Banks and NBFCs have made the process of applying for personal and auto loans quite simple, and you can always visit the lender's website to learn more. Because personal loans are unsecured, the lending standards are more onerous; but, because vehicle loans include collateral, the borrowers' requirements are less onerous.

Due to their relationships with several NBFCs and prestigious banks, auto dealers frequently provide instantaneous loan deals. Personal loans, however, need some paperwork and background checks. Your loan application is carefully examined, and the lender only approves it if there are no concerns.

3. Reasonable interest –

It is the role of your credit score that determines the interest rates. So, if you have a good credit score of 750 or above, you can expect to repay the loan amount at reasonable interest rates. The secret to get an unmatched offer on a personal loan is to have an excellent credit score. A higher credit score would also increase the likelihood of getting your loan application approved by the lender.

4. Higher loan amount –

With a car loan, you may be eligible to get a loan amount respective of the car cost. However, in the case of a car loan, you can opt to take a higher loan amount that you can used for several other purposes. Make sure you check your personal loan eligibility before applying for a personal loan online.

5. Flexibility repayment tenure –

There are multiple banks and NBFCs operating in the industry that come up with amazing personal loan offers for different types of people. One of them is flexible repayment tenure which means you can repay the borrowed amount in easier and smaller EMIs in the future.

6. Down payment –

In a typical car loan scenario, a car buyer can get a finance of up to 80% of the total car value. The remaining amount he needs to pay in the form of down payment. However, in the case of a personal loan, you can choose to pay the entire car value in one go and repayment the amount in easy installments.

7. Title – 

When you take a car loan, the ownership of the car will not be on your name until you pay all the loan installments that could be up to 5 or 7 years. On the other hand, when you buy a car through a personal loan, the car title would be on your name and your association with the lender or bank will be different from the car ownership.

FAQs

I Have a Low Credit Score. Can I Take a Personal Loan?

Yes, absolutely. Even if you have a low credit score, you can take out a personal loan for car purchase. There are many lenders available in the market that provide personal loans to people with low CIBIL score. however, you may need to pay higher interest rate against the borrowed amount as compared to a person with good credit score.

Which Loan is Best for Car Purchase?

If we go by the available car loan options in the industry, most buyers prefer SBI car loan when it comes to financing a car purchase. Their process is smoother and they charge reasonable interest rates.

Why Does it Matter Where You Apply for a Personal Loan to Buy a Car?

You may save hundreds of dollars in fees and interest by shopping around for the best auto loan. A personal loan for a new or old automobile is called a car loan. The loan and interest must be repaid over a certain period of time, often one to seven years.

The Conclusion

Though there are several car financing options available to choose from, there are many pluses associated with buying a car through a personal loan. Before you take a decision, do look at the factors above to decide which option is more suitable to you across all aspects. If, on the other hand, your credit score is a little bit lower and you can afford a higher interest rate, you may choose a personal loan. Regardless of the form of loan you choose, maintaining excellent financial health requires consistent payments and restrained spending habits.

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