Personal Loans for Buying a Car: Alternative Financing Options

One can apply for a personal loan for different purposes like buying a car, paying bills, renovating your home etc. If you board public transportation regularly, then owning a car seems like an ideal option in your situation as this could cut the cost that you incur while commuting to work. Moreover, owning a car does not only give you the flexibility to manage time more efficiently but it is also considered as a part and pride of the family.

Table of Content

• Features Advantages of Car Loan.
• Features Advantages of Personal Loan.

One must make careful choices while getting a loan to buy a car, as it can significantly affect your finances and how you manage them. Most people opt for a vehicle loan while purchasing a car because the interest rates are often low and in this financing option your loan provider makes the payment to the car dealer on your behalf. It is a kind of secured loan wherein, your car acts as collateral.

However, there is another option while buying a car i.e. personal loans. This type of loan is also known as an unsecured loan as there is no collateral. To avail of a personal loan, you must have a good credit score repayment history. Here in this blog, we will talk in brief on personal loans vs car loans.

Features Advantages of Car Loan

A vehicle loan or car loan is a financing solution that allows you to arrange funds for purchasing a car. In most cases, lenders make a direct payment to the car dealer on the buyer’s behalf. Whether you want to apply for a personal loan or a car loan you must make informed choices. It is a type of secured loan where the vehicle itself is used as collateral or security against default.

Mentioned below are few a points to keep in mind:

1. Generally, the repayment tenure of a car loan is 7 years. However, Muthoot Finance gives you the flexibility to choose the loan tenure at your convenience. Additionally, you can also use an online personal loan calculator from our website to determine how interest rates and loan terms may affect your finances and how you manage them.
2. In earlier days, availing a car loan used to be a complicated and time-consuming process. However, due to tough competition in the market, lenders have now made the process much easier and convenient for everyone.
3. With attractive interest rates and everything being online now, the loan amount required to purchase a car loan gets disbursed in no time once your loan application gets approved.

Features Advantages of Personal Loan

Personal loansprovide you with funds from a lending institution that could either be a bank or a Non-Banking Financial Company (NBFC). One benefit of this type of loan is that you can spend the loan amount as you wish i.e. whether you want to buy extended warranty and service packages, car accessories, or other utilities. This is where you apply for a personal loan; always keep in mind that your credit score is the deciding factor for personal loans.

• There is no restriction on how you wish to spend your loan amount that you received through personal loans. Unlike car loans, neither are you restricted to car dealerships.
• A good credit score gives you an upper hand when it comes to personal loan vs car loan. Personal loan interest rates are more sensitive to your credit score.
• The processing time for personal loans is generally quite quick. Additionally, if you pre-qualify, then the processing time may be even quicker than car loans. You can also enhance your credibility by making repayments on time against personal loans.

Suggested Read: What Is the Eligibility and Requirement for a Personal Loan?

When it comes to buying a new car, you have several financing options. While opting for a personal loan to buy a car, you need to keep in mind that the loan amount and interest rates may vary based on your eligibility. Also, make sure your choices and decisions are well-informed. Explore beyond car loans and dealership finance to ensure you get the best interest rate.

In most cases, car loans provide lower interest rates as it is a kind of secured loan that uses your car as collateral. Therefore, since personal loans are unsecured, lenders would prefer shorter repayment terms. This is not only beneficial for the lender but also to the borrower, because shorter term may result in higher monthly payments, but the overall loan interest will probably be lower.

Muthoot Finance is India’s leading and most trusted financing solutions provider. We understand the specific needs of our customers and offer easy car loans to both salaried and self-employed individuals. Visit the nearest Muthoot Finance branch to know more.