3 Advantages of Buying a Car with a Personal Loan

 When it comes to buying a car, there are a lot of things that you need to take into consideration. Times have changed, and the world as we know it isn’t the same anymore. In today’s post-COVID world, all of us need to follow social distancing norms and keep both ourselves and our loved ones safe. While it is true that almost every company has afforded its employees the facility to work from home, some of us aren’t that lucky. Your employer may ask you to work from your office, which is a precarious proposition if you don’t have a personal vehicle. Taking public transport or relying on cabs aren’t safe as it increases your exposure to infected surfaces. So, believe it or not, having your own vehicle is a considerable advantage in this pandemic. 

If you don’t have a personal vehicle, buying one now is the right choice. But apart from getting the design, model, and accessories right, you also need to ensure that you finance your purchase the right way. While many people would go for a car loan, taking out a personal loan is also a good option. Here are three advantages of purchasing a car with the help of a personal loan:

1.Secured Versus Unsecured Loans Online

There is a primary difference between a secured and an unsecured loan online. If you purchase a car using a car loan (secured), it will only give you the funds to buy the car. You won’t own it straight away, because your vehicle will be pledged as collateral to secure your loan and you can only take possession of it once you have paid the loan in full. If you default, your bank will repossess your car to recover its dues. With a personal loan (unsecured), however, there is no collateral involved, and in case you can’t pay off the loan in full, you will not lose your car. However, your credit score will drop, and you may face legal action.

2.Get Funds to Buy Your Car in Full

Whether you choose to finance your car purchase with a secured or unsecured loan online, you also need to look at how much value each option gives you. The loan-to-value (LTV) ratio will help you determine exactly that. The ratio tells you the total purchase amount that can be financed by a loan. To be clear, a car loan will not fund your entire purchase. Such loans usually only cover about 80-85% of the car’s ex-showroom price. This means that additional costs like registration charges, road tax, and insurance will have to be borne by you. If you don’t want to worry about these costs, taking out a personal loan large enough to cover the car’s on-road price is a good idea. 

3.Get Access to the Best Rates

All of us know how important it is to have a good credit score to get an affordable personal loan offer. If you’re thinking of purchasing a car using a personal loan, then having a good credit score can help you a lot. It will help you get access to the best interest rates possible and might end up being cheaper than finance offers available to you at your local car dealership. So, not only do you end up with an affordable loan offer, but you also get to own the car even when you’re still paying it off.

Wrap Up

Purchasing a car using a personal loan does come with a lot of advantages. Having full ownership of your car while still paying off your loan can seem pretty attractive if you’re a first-time buyer. Nevertheless, it would help if you decided what works best for you based on your situation. If you can take care of additional costs (registration charges, road tax, etc.) yourself, or you have a low credit score, taking out a car loan may make more sense. 

 


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