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When Is A Car Loan Better Than A Personal Loan? New tips 2022

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When Is A Car Loan Better Than A Personal Loan?

Car Loan Better Than A Personal Loan;There are two options available when you want to buy a car: a personal loan or a car loan. Let’s first discuss the pros and cons of both these loans.

Personal Loans

Personal loans are very simple and convenient in nature. Usually, you don’t need to undergo any paperwork to avail this type of loan and there are no credit checks required. The only thing you need to do is to pay a little extra amount as an EMI on a monthly basis.

However, personal loans come with some disadvantages too. They are not as flexible as a car loan as you have to repay a fixed amount every month. This means that if you wish to buy a different model of car in a year or two, you cannot change the amount that you need to pay every month. Also, you won’t be able to get a lower rate of interest in case of a personal loan.

Car Loans

On the contrary, car loans are a lot more flexible than personal loans. With a car loan, you can change the interest rate on a monthly basis according to the market rates. As far as the processing and documentation are concerned, you don’t have to do anything. In a nutshell, you can easily choose from a wide range of cars when you get a car loan and the repayment schedule is also flexible.

When Is A Car Loan Better Than A Personal Loan?

If you’re planning to buy a new car, then a car loan will be the best option. However, if you’re buying a used car, you will be better off getting a personal loan. Below we have highlighted the advantages of a personal loan and a car loan.

Advantages of Personal Loans

• You don’t need to go through the tedious process of applying for a loan as all the formalities are done by the lender itself.

• You can avail a personal loan with less documentation and paperwork.

• You can easily change the interest rate of your personal loan according to the market rates.

• A personal loan is a lot more flexible than a car loan.

Advantages of Car Loans

• You can buy any kind of car whether it is a luxury car, a sports car, or a family car.

• You can get a car loan in as little as a few weeks of your application.

• You will get a lower rate of interest on car loan.

Car loans are widely available, but choosing a car loan isn’t that easy as the options are infinite. People will buy a new car anytime they feel the need, but a personal loan requires a lot of thought and consideration. If you are buying a used car for the first time, you should consider your needs and see if you can afford a loan or not. The decision will affect your finances for the rest of your life.

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Personal loans can be secured or unsecured. Secured loans require collateral while an unsecured loan does not need collateral. Collateral is the item that you are borrowing the money from, in the form of a security. This means that you will pay the money back only if the collateral remains intact.

However, it is not always easy to sell a personal item like a home or your car. In case of a home, the value of the house will be decided by the local market. Similarly, your car’s value will be determined by the current market rate. Even in case of selling a personal item, a portion of the price will be given as a commission.

A personal loan is a type of unsecured loan that you take out against your income. The loan is based on the value of your income. If your income decreases, you will have to pay more to repay your loan.

There are various types of personal loans. You can choose the loan as per your requirement. You can borrow for an emergency, or you can take a long term loan for a higher interest rate. If you have a credit history, you can apply for a personal loan from the bank.

Conclusion:

It is always better to have a flexible loan facility when you are planning to buy a car. If you are not planning to change the car very often, then it is better to opt for a personal loan. However, if you plan to buy a car within a few months, it will be a lot better to go for a car loan.

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