You have so many places to go through your day. You have to go to work on time, after work, you are meeting with friends in a café that is far from your workplace. Then you have hit the supermarket for groceries and finally, go home.
Using public transportation to go to these places is a nightmare. Now you are truly considering purchasing a car. But you don’t have a pile of extra cash sitting around and waiting to be spent. Well, many people don’t have that amount of cash either; they resort to other financing options.
Personal loans and car loans are the most common options used to buy a new or a pre-owned car. But how do they differ, and which one will suit your needs better?
What Is a Personal Loan?
A personal loan is a type of unsecured loan, meaning no collateral is needed to apply for it and get it. Personal loans serve many purposes. It may be used to consolidate debt at a lower interest rate, pay for home remodeling, cover wedding costs, and even purchase a new car. It used to finance almost anything.
What Is a Car Loan?
Unlike personal loans, car loans are secured loans where the purchased car serves as collateral. Car loans are strictly used to finance the purchase of a vehicle. It covers up to 80% of the car value and helps you buy new or used cars.
Which One to Choose?
While both, personal and car loans, can be used in purchasing a car, some may feel confused about which one to choose.
There are several factors to consider that will help you choose between the two. These include:
Your Credit Score: if you looked at your credit score and noticed you are not doing great, you should consider a car loan. For personal loans, a good credit score is a crucial factor; given that they are unsecured, the bank needs to ensure you are liable to pay them back on time.
On the other hand, car loans are secured, which means less risk to the bank. The car will serve as a means of payment in case the borrower is incapable of paying back the loan.
Interest Rate: personal loans have a higher interest rate than car loans. A higher interest rate indicates a more expensive option. With personal loans, you will pay more for the car compared to car loans.
The Car You Have in Mind: banks may impose restrictions on the type of car you can buy using a car loan. You may be restricted to particular car brands; some banks may require a specific vehicle age for used cars. You can visit here to know about the taylorsource. On the other hand, you can also get more essential info on forexrenkocharts
But as we mentioned before, personal loans are used for many goals and purposes. So if the car you have in mind doesn’t meet the car loan criteria, a personal loan is the more convenient option for you. More Information Click Here: sttmag
The Bottom Line
Since a car and a personal loan can both be used to purchase a new car, it is up to you to decide which one to choose. If you don’t have a good credit score, it would be easier to get a car loan. In case you have a certain car in mind that a car loan will not cover, and your credit score qualifies for a personal loan, then apply for a personal loan. For More Information Visit this site: views360