Want to Buy A Dream Car! Which Loan Should I avail Car Loan or Personal Loan

Lets’ have a glance between a car loan and a personal loan

What is a Car Loan?

A car loan also known as an automobile loan or auto loan is a secured loan against the car/vehicle you intend to purchase. They are simple interest loans where a borrower agrees to pay back the full loan amount, as well as any interest, by a certain date, typically by making monthly payments.
 
All car loans are having a specific tenure, which ranges from 5 to 7 years. Many lenders might not approve a car loan on old cars. If you want to buy an old car, you might want to use a Personal loan to finance the same.
 
If you default on your repayments, the lender can seize the vehicle. Much like a mortgage, the lender retains ownership over the asset until you make the final payment.

What is a Personal loan?

A personal loan can be used for several purposes and is not limited to a specific use. You can use the personal loan amount for any objective like wedding expenses, education, home renovation and even to buy a car.
 
A personal loan is an unsecured loan and collateral-free, which means it, does not require any security against the car. It provides 100% financing and procures several benefits which are listed below:

Flexible and hassle-free

Personal loans are not complicated and can be availed at any time via instant loan apps easily accessible via smartphones. It gives you the flexibility to avail the loan amount and required tenure suitable for repayment of EMIs.

Fixed interest rate

Personal loan has a fixed rate of interest and does not fluctuate unlike secured loans. The percentage of interest can also be selected freely using the EMI calculator. It will remain the same till the end of the loan tenure.

Know EMI in advance

Personal loan apps feature an in-built EMI calculator that helps borrowers to calculate EMIs in advance. Once you know the monthly instalment, taking a loan becomes easy on the mind.

No collateral

When you apply for a personal loan to buy a car, you are secured, as a personal loan does not pledge any asset against the loan amount taken.

Eligibility Criteria for Personal Loan

It becomes of utmost essential to meet the criterion set by the lender. Usually, the eligibility criteria for a personal loan is basic as mentioned below: 
 

• Minimum 21 years of age
• Maximum 58 years of age
• Minimum monthly salary of Rs.15000 is mandatory
• Latest salary slips/form 16 or majority bank transactions for salaried and self-employed individuals are essential