In today's world, cars are more of a necessity than just a luxury. This is because in many major cities, many people have to travel long distances to work and back, and the unreliable public transport system does not help.
So yes, you can avail of a personal loan to buy a car. Most car loans usually offer only about 80% of the vehicle's market value, and you have to arrange the rest for yourself. Personal loans can come in handy in such situations.
Choosing between a personal loan and a car loan
There are many factors to consider while choosing between a car loan and a personal loan, including:
Car loans are secured loans, with the car being purchased as collateral. Thus, if you are unable to repay your car loan, your car can be taken away by the lender. Instead, personal loans are unsecured loans and do not require collateral. This also means that your car will not be taken away.
Interest rate and loan amount
Car loans usually offer only up to 80% of the car's on-road cost, while personal loans can give you up to 100% of the cost as a loan amount. However, since personal loans are unsecured, the interest rate will be slightly on the higher side than that of a car loan, which is a secured loan.
Your credit score
Your credit score is another factor that plays an important role when choosing between these two loans. If your credit score is good, you can easily get a personal loan at a reasonable interest rate, and that might be the better option for you. However, if your credit score is poor, your personal loan interest rate is likely to be relatively higher, and a car loan might be the better choice.
A car loan can only be used for purchasing a car. Meanwhile, an online personal loan can be used to get other related gadgets and accessories or for any other purpose as well.
Ease of availing
Both these types of loans are available online and therefore easy to avail. Bajaj Finance makes the application process even easier thanks to the pre-approved offers on loan products and other financial services. Simply fill in a few basic details to get your pre-approved offer.
The tenure for personal loans is short, ranging from 6 months to 96 months, while that for car loans is longer, ranging from 36 to 96 months. A longer tenure means smaller EMIs but a larger interest payout, while shorter tenures mean higher EMIs but a smaller interest payout.
Thus, choosing between the two depends largely on your current income and repayment ability. Be sure to budget and plan a clear repayment strategy before applying for your loan.
*Terms and conditions apply.
While care is taken to update the information, products, and services included in or available on our website and related platforms/websites, there may be inadvertent inaccuracies or typographical errors or delays in updating the information. The material contained in this site, and on associated web pages, is for reference and general information purpose and the details mentioned in the respective product/service document shall prevail in case of any inconsistency. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. Please take an informed decision with respect to any product or service after going through the relevant product/service document and applicable terms and conditions. In case any inconsistencies observed, please click on reach us.
*Terms and conditions apply