How to Find a New Car Loan That is Best for You?
Finding a car loan that is best for you is a challenging task. Whether you are purchasing a new or used vehicle, you will find it difficult to make the right decision. The first step towards finding the right car loan is to understand the differences between personal and commercial loans.
Before taking the step towards finding the best car loan, you must find the differences between personal and commercial loans. Let’s understand these two types of car loans.
Personal vs Commercial
A personal loan is the most common type of car loan, as we take the loan for our own use. Personal loan is a flexible form of credit and is generally taken to fund big purchase. A personal loan is a short-term loan. It is paid by you, so you can repay it with the minimum monthly payment or the maximum amount within a year.
A commercial loan is a loan that is taken to fund a business venture or purchase a property. A commercial loan is a medium-term loan that can be repaid in any duration. In case of an urgent requirement, you can use a bank overdraft facility.
Advantages of Personal Loans
The major advantage of personal loan is that the rates are usually low compared to the other types of loans. The interest rates are fixed and there is no prepayment penalty. There are fewer paperwork and processing costs involved in personal loans.
In case you find any difficulty in repaying the loan, your lender will be willing to work with you to make it feasible. Personal loans are a form of unsecured loan.
The biggest disadvantage of a personal loan is the fact that it is not offered to consumers at the best rates. The rate of interest is normally based on the applicant’s credit history.
Benefits of Commercial Loans
Commercial loans are generally offered to the applicants who have good track record. The rate of interest on commercial loans is higher than that of personal loans. If you have a bad credit history, you may not be eligible for commercial loans.
Commercial loans offer additional features such as longer repayment periods, less paperwork, lower fees and cheaper insurance premiums. Some banks offer an additional cash back feature on their car loan deals. You can find a suitable commercial loan deal by looking for the benefits and other features that the lender offers.
Also read this How to choose a car loan?
If you are interested in buying a new car, you can go for a personal loan. But if you want to buy a used car, you should go for a commercial car loan. You can also choose to combine a personal and commercial loan to improve your chances of getting a better deal. Before going for a personal loan, you must ensure that you understand the different types of car loans that are available.
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