If you have been thinking of making a purchase like buying a vehicle, it’s recommended that you should take a personal loan. Personal loan and automobile loan are the two most prominent and prevalent financing options.
If you can meet the lending requirements and eligibility criteria, it would be easy to get any of these loans. In recent times, personal loans have surpassed automobile loans in terms of popularity. This is because the former is more convenient and easy to avail without having to go through a tiring approval processes.
Personal loan vs. car loan: which one to go for?
When you’re given a choice between a vehicle loan and personal loan, you will be eager to know more about each options. You want to make an informed decision. The first thing to be mentioned here is that a personal loan is a type of unsecured loan. You can use it for a variety of purposes, like buying a vehicle. But when you have a car loan, as the name suggests, it’s meant only to buy a car. Each of these loans has their own pros and cons. You should analyse these before you finalise anything.
The car loan:
A car loan is secured against the vehicle that you’re purchasing. This implies that your new car is collateral for the loan that you have taken. It also indicates that if you fail to repay the loan by any chance, the lending company will seize your car. The loan amount has to be paid out in fixed installments throughout your chosen tenure. The most important point here is that, like mortgage, the lending company will retain ownership over the asset until you pay off the amount. The rates of interest are lower. This is because the loan is secured against your car. If you’re willing to take this loan, you should have a good credit score to increase the chances of approval.
The personal loan:
This loan can be availed from any bank or reputed NBFC. Here, you won’t have to offer any collateral to secure the lump sum amount of money which you have borrowed. This type of loan also requires a credit score above 700. But check with various lenders. The greatest benefit of going for a personal loan is that there is no restriction on how you may use the funds. There is a lot of flexibility in the repayment structure. You can choose this as per your convenience.
Whether you should go for a car loan or the personal loan to buy car is completely your decision. If you opt for a personal loan, you will get a lump sum amount of money to utilise in your own way. The application process is also pretty simple and straightforward.
How to get personal loan?
If you are wondering on how to get personal loan with low interest rate, compare different lenders, their regulations, approval process and terms and conditions. Obtaining a personal loan is simple. Some banks give you up to Rs.25 lakh. You have the freedom to repay the amount in a period from 2 years to 5 years. You can make use of a free online EMI calculator. This can help you get the exact figure of the amount that you have to pay each month for the personal loan.
Purchasing a car is the second biggest investment you’ll make after your home. With a personal loan to buy car, you can get credits easily so that you can get a car to adorn your garage without delay.