4 Advantages of Financing a Used Vehicle Purchase with a Private Loan

Buying a vehicle is always a momentous occasion, especially if it’s your first vehicle. Owning a car is seen as a status symbol, something that sets you apart from the herd. It is also a sign of financial stability because if you can afford to purchase a vehicle, it means that you’re doing well reasonably well in life. In India, buying a car is a crucial decision because it not only affects you but your entire family. Vehicle purchases are usually made keeping their needs and comfort in mind. Plus, if you’re upgrading from a two-wheeler/public transportation buying a used vehicle is more sensible as you can save a lot of money. There are also many ways in which you can finance your used car, including private loans. Here are four advantages of using a private loan to finance your used vehicle purchase:

1.You Can Finance the Entire Purchase

A private loan is a loan given to you from non-bank institutions. So, loans from your parents, friends, extended family and even angel investors fall into this category. So, if you take out a private loan, you’re more likely to get enough money to fund the entire vehicle purchase. However, a car loan lender will only fund up to 85% of your vehicle’s on-road price. You will have to bear the other costs associated with taxes, registration, insurance, and accessories. If you don’t have enough money, you’ll be stuck. But a private loan company will be able to help you.

2.Easy Access

This is one of the biggest advantages of taking out a private loan from your family or private loan company. There’s no question of filling in a lot of paperwork or waiting too long when you’re borrowing from your family and friends. Even with a private loan company, the application process is seamless. The documentation is minimal, and you’ll get your loan directly into your bank account if your loan application is approved. On the other hand, a car loan involves a lot of paperwork and waiting for loan approval.

3.No Collateral

When you apply for an auto loan/car loan, the vehicle that you're purchasing becomes your immediate source of collateral. This means that the title of your car will remain with your lender until you've fully repaid the loan. If you default, they'll take possession of your vehicle. So, if you don't have any collateral to give up, a private loan is the way to go. Your friends and family will not ask you to put up your house or vehicle as collateral in exchange for a loan. If you default, it may make things awkward, but at least you won't lose the car.

4.Flexibility

When you apply for a private loan at your neighbourhood bank, you have little say in terms of the loan being offered to you. If you find the loan offer affordable, you can accept it. Otherwise, you'll have to keep looking. But borrowing money from friends and family brings with it a whole lot of flexibility that you both can negotiate through. You can work out the loan amount, due date, and repayment tenure and arrive at comfortable terms for both of you. This is not possible with a typical car/auto loan.

In Conclusion

The points mentioned above illustrate why it’s better to opt for a private loan for purchasing a used vehicle instead of going for a typical auto/car loan from a bank. Just ensure that you repay the loan on time to avoid any awkwardness between you and your family/friends later.

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