Owning a car is a dream of many persons. Some of them want to purchase a new car in case they afford it easily but some of them opt for buying a second-hand or used car. They come to a conclusion of buying a used car for many reasons such as lower cost, get the model they like in their budget, less insurance premium, can make rough use of the car, etc.
Buying a car is the second most expensive affair after buying a house. It requires huge amount of funds. Though there are many lenders to offer you a Car Loan so that you can buy it now but to repay the loan is a long term liability.
For buying any car, no matter it is new or old, banks offer you car loan. For providing car loan for used car, banks have set their own norms and conditions. In every situation, it is probably not possible for you to buy an old car through a car loan even though it is available at low interest rate. In such situations, you may consider buying a used car through Personal Loan as personal loan can be used for any purpose. Further, the process of applying for a personal loan is simple and disbursal is quick.
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It is true that Car loan comes at a lower interest rate in comparison to a personal loan but in a car loan, you may not get the 100% finance from the lender for used car loans as the loan amount will be 70% to 90% of the car value and you need to bring your own contribution as well which is called "down payment". If you do not have any savings, making down payment can be a difficult task for you. In case of personal loan, you can get entire amount of cost of your car as loan. There is also an option that you can prepay your personal loan any time during the loan tenure whenever you have surplus funds available.
Following are the major 3 Reasons why personal loan for used car is better option than Car Loan:
Unlike new car loan, bank's approval of car loan in case of used cars is subject to the age, model and condition of the car. Moreover, interest rate on used car loans is also usually 3% to 5% higher than that of new car loans.
Interest Rate
You will face rejections of extending car loan from most of the financial institutions, when age of the car is old or when it has been already sold multiple times before. With buying used car with personal loan, there is no such point of worry.
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In case of used car bought through availing personal loan, the ownership of car will remains with you as a personal loan is a collateral free loan. There is no need of hypothecating your car with the lender.
In case of used car bought through car loan, you can sell your car only when you have repaid entire amount of loan to the lender and made your car free from hypothecation.
In case of personal loan, you can sell your car anytime and without any boundation as you are the owner of the car and the car is under your own possession.
It is correct that car loan is available at comparatively lower interest rate than personal loan interest rate but in case you are facing problems in getting car loan to buy a used car due to any reason than you must know that you can buy a used car through personal loan. The major benefit in buying a used car through personal loan is you can sell it any time you want even without repaying the personal loan.
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