Personal loan vs second hand car loan
According to a report, India’s used car market is expected to reach $70.8 billion by FY2030. This growth can be attributed to the rising demand for affordable vehicles.
To complete this purchase, many opt for a 2nd hand car loan that extends funds for the said purpose.
However, the credit form comes with certain limitations and rigid terms. There are chances of loan rejection if an applicant fails the verification.
Comparatively, availing a personal loan for salaried will help a borrower avail substantial funds against simple eligibility.
If confusion persists, here are some pointers individuals can check to make an informed decision.
What makes a personal loan a better option than a second hand car loan?
Availing a credit form obligates a borrower into a long term repayment structure. Hence, it is vital to choose the right credit variant and its terms carefully.
The following pointers substantiate a personal loan as a better credit option:
- Loan amount
An individual can avail substantial funds against a personal loan as compared to a second hand car loan.
Ideally, lenders disburse the credit against a pre-owned car loan after conducting the vehicle’s valuation. This can force a borrower to depend on savings to arrange the shortfall.
Comparatively, a personal loan will cover the entire amount without such restrictions.
- Interest rate
The interest rate levied on a 2nd hand car loan is usually higher than a personal loan. Additionally, borrowers with good credit scores and repayment history can convince lenders to reduce the interest obligations on a personal loan.
For instance, if a borrower buys a pre-owned car with a second hand car loan but the mileage or function may be faulty, the overall deal becomes expensive.
Potential borrowers must consider this point to decide should they take a personal loan or a car loan for a new vehicle or a pre-owned one.
- Eligibility
The eligibility parameters against the best personal loans are quite simple. The basic requirement include-
- A potential borrower needs to fall in the age bracket of 20 to 60 years
- An individual needs to maintain a 750 CIBIL score
- Applicants must be employed in an MNC, private or public company with a stable income.
- Individuals must have an Indian residency.
Nevertheless, individuals with a bad CIBIL score looking for a personal loan must increase their credit performance by clearing outstanding debts and making timely repayments.
However, an individual applying for a second hand car loan needs to fulfill additional requirements. This includes-
- Individuals need to fall within the age bracket of 21 to 65 years. At the same time, self-employed applicants must be aged between 25 to 60 years.
- The credit is applicable only for private cars
- A car’s age should not be more than ten years
- The vehicle shouldn’t have more than three owners
- Salaried applicants need to have at least one year of work experience
These rigid parameters make a personal loan a better credit variant. In this regard, one can also check the personal loan app to access the updated eligibility parameters.
- Purpose
Applicants should know that a 2nd hand car loan can be only used to purchase a pre-owned car. This stringency makes a personal loan a better loan option. Personal loans come with the flexibility of usage.
Individuals can avail substantial amounts against a personal loan for big-ticket spendings, such as marriage, medical bill payments, liquidity needs, etc. Additionally, one can also use the fund to purchase a new vehicle.
- Vehicle ownership
The vehicle ownership can also vary between these loan forms. Ideally, a borrower will get car ownership after the completion of the loan tenor. However, the ownership is instantly transferred to a purchaser in terms of a personal loan.
Apart from the mentioned features, one can also avail of personalized offers and features on personal loans.
For instance, reputed financial lenders like Bajaj Finserv give pre-approved offers to reliable borrowers. These offers make the loan application quick and hassle-free. Such offers are applicable to financial products like business loans, personal loans, etc. Check your pre-approved offer by entering your name and contact number.
These factors make a personal loan a better credit option than a 2nd hand car loan. However, the benefit scale is subject to an applicant’s credibility and repayment structure.
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