Loans are meant for people who are looking for financial help in order to meet their daily needs and requirements. This article presents information about obtaining advantages and disadvantages between a used car loan and personal loans.
Generally, people buy used cars for two reasons. Either they have a tight budget or they want to use it to refine their driving skills before buying a new car. In case of the former, the buyer is more likely to take a used car loan.
Used car loans are slightly different from the usual car loans taken for buying new cars. Unlike new car loans, the loan amount in used cars loans depends on the age, model and condition of the car. The interest rates on used card loans are also generally higher by 3 per cent–5 per cent, almost equaling personal loans rates on the lower side. Thus, many use personal loans to finance their used-car purchase.
Here are some factors that you should keep in mind while choosing between personal loans and used car loans.
Interest rate: Interest rates of used car loans range from 14% to 18% while those for personal loans range between 11% and 24%. For example, the interest rate on personal loans from Axis Bank ranges from 11.49% to 20% whereas interest rates for used-car loans start from 15%. The interest rates on your personal loan will be largely determined by your credit score, employer, income and your loan amount. Therefore, it is quite possible that if you have a good credit score and/or a high salary with a reputed employer, personal loans may prove to be a cheaper option than used car loans.