How To Avail Best Personal Loans For Car Finance In India?

Personal Loans

Cars have become a necessity for a family rather than a luxury. People have to travel long distances in most cities, and public transport is often unreliable. However, new cars are not cheap, so most people need access to funds to finance the purchase of a vehicle.

Where can you get funds for buying a car?

There are two options that are available for you — traditional car loans and personal loans. Most lenders offer loans of up to 80% of the market value of a vehicle. Hence, many people turn to personal loans to fully finance the purchase of a vehicle and bear additional costs, like buying accessories or making modifications etc.

The following sections will help you choose the best car loan.

What Is a Car Loan and a Personal Loan?

Car loans are secured loans offered by various lenders for the sole purpose of buying a vehicle. These loans require you to put the purchased car as collateral. If you are unable to repay the loan amount, the lender has the right to take away your car to recover the dues. 

Personal loans are unsecured loans; this form of financial assistance does not have end-use restrictions. Thus, you can use them for any purpose, including debt consolidation, paying for house renovations or purchasing a new car. These loans generally have higher interest rates compared to secured loans.

Car Loan vs Personal Loan — How Do They Compare?

Here are some of the salient differences between these two loans:

How a Personal Loan For Car Finance from Navi Is a Better Option than Traditional Car Financing?

Navi offers personal loans of up to Rs. 20 lakh with interest rates starting at 9% per annum. You can download the Navi app to apply for a personal loan. 

The following are some of the advantages of choosing Navi’s personal loan to buy a car:

No need for a down payment

Even the best car loans require you to pay a down payment, especially if you have a low credit score. With a personal loan from Navi, you can get 100% financing for the vehicle’s cost without making a down payment.

The car’s ownership stays with you

A car loan requires you to hypothecate the car purchased with the lender and submit proof of purchase. A personal loan allows you to retain full ownership of the vehicle. Moreover, you do not have to give it up in case of a default. 

Less restrictive

Getting an auto loan can be tricky in some cases as lenders are willing to finance only specific models and certain types of vehicles. A personal loan is often the only option when buying a vintage car or a second-hand car. You can also buy any car model as long as you can afford the EMIs.

Minimal documentation

You do not need to furnish many documents to avail a personal loan. Lenders like Navi require you to submit your Aadhaar and PAN only when applying for a loan.

Available online

Online lenders allow you to easily avail a loan via their website or mobile app. The process is entirely digital. Thus, you don’t need to visit a bank or an NBFC and go through the hassles of exhaustive paperwork.

Also Read: Why Should You Take Personal Loan For Car Finance?

How to Apply for a Personal Loan To Purchase a Car?

Follow the given steps to get a personal loan for buying a car from Navi:

Step 1

Download the Navi application from Play Store or App Store.

Step 2

Open the application and tap on ‘Personal Loan’. 

Step 3

Select the loan amount and EMI, depending on your repayment capacity. 

Step 4

Complete KYC by submitting your Aadhaar and PAN.

Step 5

Enter details of your bank account, and the money is transferred almost instantly to your bank account. 

Some Tips to Choose the Best Car Loans

• As auto loans are secured loans, they generally come with lower interest rates than personal loans. With a good credit score, you can get personal loans for cars at the best rates to buy a new vehicle. 
• Personal loans usually have a shorter repayment tenure compared to traditional car loans. Although a longer repayment period is more affordable owing to lower EMIs, you will have to pay more interest over time. 
• You can apply jointly with a family member to be eligible for a higher loan amount.
• For personal loans, financial institutions generally restrict the loan EMI to 40-50% of your monthly income. A higher credit score, larger income and lack of outstanding liabilities will allow you to get a higher loan amount sanctioned. 
• Use an online tool like a personal loan EMI calculator to find out the EMI and total interest payable beforehand.

Also Read: Personal Loan Interest Rates Offered By NBFCs

Final Word

Car loans and personal loans are the two popular options for financing a car purchase. However, even the best car loans will not provide 100% funding for your car, and your options will be limited. As an alternative, you can choose a personal loan as a flexible means of funding for your new car and additional accessories. 

Frequently Asked Questions

Before you go…

Looking for instant 🚀 personal loans 24*7 anywhere, anytime? Get personal loans up to ₹20 lakh starting at 9.9% p.a. Install the Navi app now!

Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article. 

Explore Personal Loan Offers in Your City