What Kind of Loan Should You Get for Used Cars

One of the main aspects that a person has to prepare for when buying a used car is the finance. For people who are looking to buy used Tata Nano in Bangalore online there are different types of financial options open. But most buyers prefer to take a loan from a bank or a finance company.

For used car purchase there are two types of loans that are considered.

  • Used car loan
  • Personal loan

Here is a quick analysis of both the types of loans.

Used Car Loan

  • This is a secured loan where you will have to hypothecate your car with the lender till the loan amount is repaid completely.
  • The rate of interest charged on this type of loan is less compared to personal loan because the asset is secured.
  • You can adjust the tenure of the loan and the EMIs as per your convenience.
  • Early repayment of the loan is possible. However the terms and conditions of repayment will depend on the lender and his policies.
  • You don’t need a very good credit rating for availing this loans because the car is hypothecated for security.

Personal Loan

  • This is an unsecured loan and hence you do not need to hypothecate your car or any other asset for availing this loan.
  • The rate of interest charged is on the higher side since there is no asset that is secured.
  • You need to have a very good credit rating for getting this loan. A lender would not be ready to lend personal loan if you have a bad credit history.
  • The tenure of the loan and the EMIs can be adjusted as per your convenience.
  • Early repayment of personal loan is possible depending on the terms and conditions of the lending bank or finance company.