Having a car is an absolute necessity in many parts of India where public transport is not at par with the modern transport facilities. However, it is also a reality that affording the dream car in India does not come easy. With a steep inflation and unstable economy, many people are cutting down on their luxury aspirations and settling for smarter solutions. This has resulted in a high demand for second hand cars in the Indian market. With many authorized dealers stepping into the used car sector, and offering features as good as a new one, there is a boom in the second hand car market. Today, you can easily buy the car of your dreams at a much lower price from a used car dealer and with money loan apps, affording a second hand car has become easier than ever.
You just have to install the best money loan app and apply for an online loan through the app. The loan process is simple, the documentation is minimal and the loan is processed in a matter of hours. But when it comes to buying a second hand car, many people get confused whether to opt for a personal loan or a used car loan.
Personal loan or a used car loan
- Personal loan gives you full ownership of the car
When you buy a car on a used car loan, you do not get the ownership of the car outright, whereas if you take a personal loan, you will actually buy the car. This is because a used car loan is a secured loan and a personal loan is an unsecured loan. Going for a personal loan gives you the freedom of selling the car at any moment if you are not satisfied or if you want an upgrade.
- Personal loan is simple and costs less
When you buy a used car with a car loan, there is the whole extra charges and process related to hypothecation in the registration of the new vehicle. Hypothecation by a lender allows them a kind of pseudo-ownership over the vehicle. The same is also mentioned in the vehicle registration certificate by the RTO when it is transferred in your name. When the loan is paid off, you will have to go to the RTO office and apply to get the hypothecation removed from the registration certificate. You may also need to do the same with other vehicle documentation as well in some cases. However, if you take an online loan and buy the car with the loan money, there is not hypothecation mentioned in the car RC and there is no need to remove the same either.
- Personal loan is simplified
Third factor you must understand is that getting a used car loan is a complicated process. In fact, the formalities to buy a used car through a used car loan are same as that of a new car. You will have to undergo the same documentation and hassles and what’s more the interest rate on used car loan is also higher than a new car loan. On the other hand, if you are taking a personal loan to buy a used car, you will not be charged as high interest rates and paperwork is much simpler than the used car route.
- Personal loan is quick
The time taken to apply for a used car loan is much longer than a personal loan. When you apply for an used car loan, the documentation has to be done manually and some lenders may even require car valuation by their authorised valuers. This makes the process slow and vulnerable to human error. Moreover, if the valuer undervalues the used car, they lender will only give you a smaller loan amount which might not be enough to buy the car. Instead, if you take a personal loan, you do not have to deal with the loan hassle. Personal loan can be obtained from a money loan app in a matter of minutes and since there is no valuation involved, you can get a loan of your preferred or required amount.
- Personal loans are easy to settle
Finally, if for any reason you need to sell off the used car, it can be very complicated with a used car loan. Pay off the loan first and get NOC, only then can you transfer the car ownership. A used car purchased with personal loan can be sold off immediately. Sell the car to a buyer; pay off whatever amount remains of the personal loan and you can use the rest of the money for your own requirements.
With the increased demand for financing, the loan market is ripe with different types of loan products. As such, it becomes your responsibility to research these different loans available in the market and go for the one that best suits your requirements. Though now you know the benefits of a personal loan over a used car loan, make sure to check your eligibility and credit score before applying for the loan.