Buying a car is an exciting milestone, but car purchase requires significant financial planning. While auto loans are the go-to choice for most vehicle purchases, there are compelling reasons to consider small personal loans for a car purchase. Let’s explore why a personal loan from a trusted provider like Airtel Finance might be the smarter route for your car-buying journey.
1. Flexibility in Purchase Source
One of the key benefits of a small personal loan for buying your car is the flexibility it offers in terms of where you can buy your vehicle. Unlike auto loans that are typically tied to dealerships, personal loans allow you to explore a wider range of options.
Private Sellers
When you spot your dream car being sold by a private owner, securing an auto loan can be a hassle. The seller may not want to wait for lengthy bank approvals. With a personal loan for a down payment on the car, you can get the funds quickly and seal the deal on your own terms. Airtel Finance offers personal loans with minimal documentation, making the process even smoother.
Non-Dealership Purchases
Small personal loans for car purchases also come in handy when you want to buy a car from unconventional sources like auctions or online marketplaces. These sellers may not have tie-ups with banks for auto loans. A personal loan gives you the freedom to shop wherever you find the best deal.
2. No Collateral Required
Another significant benefit of small personal loans for buying cars is that they are usually unsecured. This means you don’t have to put up your car as collateral, unlike in the case of auto loans. While this may result in slightly higher interest rates, it also reduces the risk of losing your vehicle if you face financial difficulties down the line.
3. Zero Down Payment
Auto loans often require a down payment, which can be a substantial amount. If you don’t have enough savings, a personal loan for a down payment on the car can help you bridge the gap. With Airtel Finance, you can get a personal loan of up to ₹5 lakh without any down payment requirement. Check your eligibility and apply through the Airtel Thanks app in minutes.
4. Insurance Flexibility
When you finance your car through an auto loan, the lender usually mandates comprehensive insurance coverage. This can significantly add to your monthly expenses. The benefit of a small personal loan for buying cars is that you have more control over the type of insurance you choose for your car.
For example, if you’re buying a second-hand car in good condition, you might opt for only third-party liability insurance, which is more affordable. This flexibility can result in substantial savings over the life of your loan.
5. Ideal for Older or Classic Cars
If you have your heart set on a vintage beauty or a car that’s more than a decade old, auto loans might not be an option. Lenders often have age restrictions on the vehicles they finance. Personal loans, on the other hand, can be used to buy cars of any age. This makes them perfect for financing your dream classic car or a restoration project.
6. Credit Score Considerations
For those with less-than-perfect credit scores, qualifying for an auto loan can be challenging. Some personal loan providers specialise in offering loans to borrowers with lower credit scores. While the interest rates may be higher, a personal loan can still be a viable path to car ownership.
However, it’s crucial to understand the impact of your credit score on loan terms. Check your credit score for free on the Airtel Thanks app and work on improving it before applying for a loan. A higher score can help you secure better interest rates and save money in the long run.
Car Loans vs Personal Loans: Key Differences
Let’s summarise the main differences between car loans vs personal loans:
|
Feature |
Personal Loans |
Auto Loans |
|
Purpose |
Flexible, can be used for various expenses |
Specifically for vehicle purchase |
|
Collateral |
Usually unsecured, no collateral required |
Car serves as collateral |
|
Interest Rates |
Generally higher due to the unsecured nature |
Lower interest rates |
|
Loan Amount |
Typically smaller loan amounts |
Higher loan amounts based on car value |
|
Down Payment |
Not compulsory |
Often required |
|
Insurance |
Flexibility in insurance coverage |
Comprehensive coverage mandatory |
Choosing the Right Personal Loan for Your Car Purchase
If you’ve decided to go ahead with a small personal loan for your car purchase, the next step is finding the right lender. Look for a reputable provider like Airtel Finance that offers competitive interest rates, flexible repayment terms, and a seamless application process to begin financial planning for your car purchase.
Some factors to consider when choosing a personal loan:
- Interest rates: Compare offers from multiple lenders to find the most competitive rates. Airtel Finance offers attractive interest rates starting at just 12% per annum.
- Loan tenure: Choose a repayment term that fits your budget. A longer tenure means lower EMIs but higher overall interest paid. Airtel Finance offers flexible tenures ranging from 6 to 36 months.
- Processing fees: Look for lenders with low or no processing fees to minimise your borrowing costs. Airtel Finance charges a nominal processing fee of just 2% of the loan amount.
- Eligibility criteria: Check the lender’s eligibility requirements before applying. Airtel Finance has simple criteria, including a minimum age of 21 years and a minimum income of ₹15,000 per month.
- Documentation: Choose a lender with minimal documentation requirements for a hassle-free experience. With Airtel Finance, you only need to submit basic documents like your ID proof, address proof, and income proof.
Summing Up
Taking a small personal loan for your car purchase can be a smart financial move, offering flexibility, convenience, and cost savings. By weighing the pros and cons of car loans vs personal loans, you can make an informed decision based on your unique circumstances.
If you’re looking for a trusted lending partner, Airtel Finance offers attractive personal loans tailored to your needs. With quick processing, minimal documentation, and competitive rates, Airtel Finance can help you get behind the wheel of your dream car sooner. Download the Airtel Thanks app and start your loan application today!
FAQs
- Can I use a personal loan to buy a used car?
Yes, personal loans can be used to purchase both new and used cars. They offer flexibility in terms of the vehicle’s age and source.
- How much can I borrow with a personal loan for a car purchase?
The loan amount depends on your eligibility and the lender’s policies. Airtel Finance offers personal loans of up to ₹5 lakh, which can cover a significant portion of your car’s cost.
- What is the interest rate for a personal loan used for a car purchase?
Interest rates for personal loans are generally higher than auto loans due to their unsecured nature. However, Airtel Finance offers competitive rates starting from 12% per annum, based on your credit profile.
- Can I get a personal loan for a car with a low credit score?
While a low credit score may make it challenging to secure a personal loan, some lenders specialise in offering loans to those with less-than-perfect credit. However, the interest rates may be higher. It’s advisable to work on improving your credit score before applying for a loan.
- What documents do I need to apply for a personal loan for a car?
The required documents may vary between lenders. Generally, you’ll need to submit proof of identity, address, and income. Airtel Finance has a simple documentation process, requiring only your ID proof, address proof, and income proof.
