Personal Loan
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What Is the Difference Between a Personal Loan and a Car Loan?

The financial market provides multiple credit options. One of them is personal loans, a form of unsecured credit. With unrestricted end use, this loan is one of the most suitable advances to avail to meet urgent financial requirements.

On the other hand, a car loan is specifically meant for the purchase of a new car and the amount so availed cannot be utilised for any other purpose.

Both these loans offer custom benefits to borrowers. Check out other details that differentiate personal loans from car loans.

  Personal Loan Car Loan
Type of loan It is an unsecured loan. Hence, you do not need to provide any collateral to avail the same. It is a secured loan. To avail this loan, you need to hypothecate your vehicle to your lender.
Features Personal loans offered by Bajaj Finserv come with unique features.
  • High-value loan amount of up to Rs.25 lakh
  • Instant approval within 5 minutes
  • Choose from a flexible tenor of repayment
  • Flexi personal loan for multiple withdrawals and pre-payment at any time before the tenor ends
Lenders offer different types of car loans, like a used car loan, with various features and benefits.
  • Loan amount based on the car’s value
  • Hassle-free loan application and approval
  • A long tenor of repayment as per the lender’s policies.
Eligibility and documents Get this loan against easy-to-meet personal loan eligibility criteria. The documents required include:
  • KYC documents
  • Employee’s identity card
  • Last two months’ salary slips
  • Last three months’ bank account statement
Meet the basic eligibility criteria asked for by your lender to get this loan. Apart from KYC documents, salary slips, and bank account statements, a borrower also has to present ownership papers of the vehicle.
Interest rate Reputed NBFCs like Bajaj Finserv offer Personal Loans at affordable personal loan interest rates.fees and charges. In case of loans like a commercial vehicle loan, the interest rate provided by various lenders may vary and can be affordable, depending on the lender you choose.

Pros and Cons

If you are looking for a feature-rich credit to purchase a car, you can apply for a personal loan with Bajaj Finserv.

  • Personal loan pros:
    • These loans come with no restriction on end-use
    • You receive flexibility in loan repayment
    • Available without any collateral
    • You can also purchase a car with this loan
  • Personal loan cons:

    A disadvantage of personal loans is that if the credit is not managed properly, it can be overburdening for the borrower. This can be conveniently overcome by repaying the loan on time.

  • Car loan pros:
    • The loan gives access to a lump sum amount for a car purchase.
    • By availing credits like a second-hand vehicle loan from the right lender, you can receive favourable terms and conditions.
  • Car loan cons:
    • You cannot put it to any other use than a car purchase
    • Interest rates on these loans are usually high
    • You cannot have a title to your car until you make the final repayment
    • It requires an upfront deposit