Whether you’re planning on buying a car or not, it’s easy to be tempted to do so with all the car loan ads you see on TV and other social media sites like Facebook, Twitter, Instagram, etc.
However, not many people know that they can also use personal loans to finance the purchase of a new or used car.
Diets like Alex Bank – auto loan financing program facilitates the process of buying the car of your dreams. Before choosing a bank or loan program, compare the interest rates, associated costs, and other aspects of different car loan options.
Amount of the loan
With a good credit rating, banks can only offer a car loan amount of up to 80% of the price of the car. You will need to find steps to get hold of the remaining 20% on your own. Even then, auto loans carry interest rates ranging from 8% to 18%.
However, some digital banks may offer you personal loans of up to $ 30,000, with interest rates as low as 4.99%, provided you have a strong credit history and a high credit rating.
Auto loans are secured loans. This means that your car becomes the post-purchase collateral object. In the rare unfortunate event that you miss a few installments, the lender will have the power to foreclose your car until you have paid the premiums.
This risk can lead to a major transport crisis for you, which can lead to further delays in the repayment of loans. A personal loan does not present this risk, and the bank cannot seize your car under similar circumstances.
Purpose of the loan
A car loan is exclusive to the purchase of a car and only covers part of the cost of the car. This prevents you from personalizing your car or adding the necessary accessories that enhance your car experience.
You will find it more practical to opt for a personal loan than a car loan because you will be able to obtain loan amounts that will help you cover all the additional costs that are exclusive to you.
Make a detailed assessment of all the costs you plan to incur on the car before applying for the loan. It is recommended that you speak with auto repair experts to find out how much money you will be paying.
Take advantage of a strong credit score
If you have a good credit history, your credit score will also be good. Personal loans are a great way to use your strong credit score and even work as a method to improve them. You will also need to submit legal documents to prove that you are not bankrupt.
A strong credit rating helps you get a sizable loan amount at lower interest rates. You can use it to your advantage when buying a car. Regular and on-time repayments of your personal loan will also help you increase your credit score.
Pre-approved personal loans
Getting a car loan can be a tedious task and will require a lot of paperwork before it comes to fruition. In addition to ID and residency documents, you may also need to submit income tax returns
However, if you are a regular customer of a bank with a good credit rating, the bank will notify you of pre-approved personal loans. You can use the loan amount whenever you need them without any delay or documentation as they are pre-approved.
term of the loan
Tenure is the term provided to you to repay the loan amount. The longer the period, the lower the EMI. However, when the tenure is long, interest rates rise, which is a significant amount of your small EMI.
Personal loans are often short term and banks usually charge only minimal interest on the loan amount. It is a suitable option if you want to go for a loan temporarily. Plus, you can have prepayment options with personal loans without having to pay prepayment fees.
Buy a used car or rebuild a salvage car
Auto credit offers you a minimum amount, especially if you want to buy a used car. Banks will consider maintenance costs, energy efficiency, years of use and history before providing you with a loan amount that is often insufficient.
In a scenario where you want to rebuild an inoperative car called a salvage, you will have a hard time getting a loan approved by the banks. Auto loans work by taking the car as collateral to arrive at value. Banks will deny your request to purchase an old or salvage car because they have little or no collateral value.
On the other hand, options like Alex Bank bank loan financing are best in this scenario. You could cover any additional expenses you may incur, including maintenance, parts, etc.
Change of ownership
If you buy a car through an auto loan, you will not be considered the owner until you pay your final payment of the loan amount. Because the loan term for auto loans is too long, it can be difficult to trade in or resell the car because it is not in your name.
However, when you use a personal loan to finance a car purchase, you will own the car from the day you buy it. You can transfer the ownership or sell the vehicle whenever you want without any problem. It gives you more options and opportunities as a car owner.
You can apply for personal loans on the Internet or through your smartphone. Unlike auto loans, they don’t take too long to process. Auto loans typically take 3-5 business days to process if all of the paperwork is correct.
It only takes you a few minutes to complete the whole process. You can apply for a personal loan 24/7 at almost any bank, with dedicated customer service taking care of your requests. And, as long as your documents are correct, your personal loan can be sanctioned within hours.