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Should You Get a Used Car Loan or a Personal Loan for Second Hand Car?

When a person decides to purchase used Ford Figo in Bangalore the first thing that they try to do is arrange finance. The most common finance method people seek out at this time is getting a loan from a bank or a finance company. The bank or finance company will lend up to 80% of the valuation of the car. But the question most people ask is should they opt for a personal loan or should they go for a used car loan.

Here are a few factors that can help you make a decision.

Rate of Interest

The first thing that matters in any kind of loan is the interest rate that will be charged and the type of interest. If you compare the interest rates for personal and used car loan, you will find that the personal loan is a bit expensive. However, it may not be the case with some banks. Also most banks charge reducing balance interest rate. However it may differ for finance companies.

Extent of Finance

In used cars loans you are eligible to get up to 80% of the value of the car as a loan. However the value of the car will depend on the valuation set by the lender and not your purchasing prices. In this case, the amount of margin money that you have to manage can be a bit higher. Compared to this you can pay off the entire purchase price of the car by getting personal loan.

Credit Score

If you do not have a good credit score then you may be denied a personal loan because it is an unsecured loan. However you may get a used car loan because you are hypothecating the asset.


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