Personal Loan vs. Car Loan: Choosing the Right Financing Option with Finnable

When it comes to financing a new vehicle or meeting other financial needs, finding the right loan option is crucial. Personal loans and car loans are two popular choices, each with its own set of benefits. Let us explore the differences between personal loans and car loans, and how Finnable, a trusted loan provider, can help you make an informed decision.

Understanding Personal Loans

Personal loans from Finnable offer a versatile financing solution for various purposes, including car purchases. Here are some key features of personal loans: 

  1. Flexibility for Your Needs: Finnable’s personal loans are designed to provide you with financial flexibility. Whether you’re planning a home renovation, consolidating debt, or purchasing a car, a personal loan can cater to your diverse needs. With Finnable, you can borrow a specific amount and utilise it as per your requirements, without restrictions.
  2. No Collateral Required:  Unlike car loans, personal loans from Finnable do not require collateral. This means you don’t have to put your car or any other asset at risk to secure the loan. This aspect offers peace of mind and allows you to explore loan options without worrying about potential asset loss. 
  3. Competitive Interest Rates: Finnable understands the importance of affordability. We offer competitive interest rates on personal and car loans, ensuring that you can borrow money at a reasonable cost. By carefully assessing your financial situation, Finnable provides personal loan options tailored to your needs, with favorable interest rates. 
  4. Simple Application and Quick Approval: At Finnable, the loan application process is straightforward and streamlined. You can easily apply online, saving you time and effort. Moreover, Finnable’s efficient approval process ensures faster decisions, allowing you to access funds promptly, whether you’re buying a car or addressing other financial obligations.

Exploring Car Loans

Finnable provides personal loans to help you purchase the car of your dreams. However, Finnable does not often direct car loans. Following are the features of the car loans available in the market:

  • Purpose: A car loan aims to provide financial assistance to individuals who want to purchase a vehicle but may not have enough funds to pay for it outright. Car loans allow borrowers to spread the cost of the vehicle over time, making it more affordable by breaking it down into manageable monthly payments.
  • Loan Amount: Car loans typically allow borrowers to finance a significant portion of the vehicle’s purchase price. The loan amount is based on the value of the car, and borrowers can choose to finance the entire cost or make a down payment to reduce the loan amount.
  • Loan Term: The loan term refers to the duration of the car loan, typically measured in months. Common loan terms range from 36 to 72 months, although longer terms may be available. A longer loan term generally leads to lower monthly payments but may result in paying more interest over time.
  • Repayment Schedule: Car loans typically follow an amortisation schedule, which outlines the repayment plan over the loan term. The schedule shows the monthly payments, including principal and interest, and how they gradually reduce the loan balance. The repayment schedule helps borrowers understand the total cost of the loan and how long it will take to pay off the debt

 

Let us better understand the differences between car loans and personal loans in the following table:

Features Personal Loan Car Loan
Purpose
Versatile: Can be used for various expenses, including car purchases.
Specifically designed for purchasing vehicles.
Collateral
Unsecured: No collateral is required.
Secured: The vehicle serves as collateral.
Loan Amount
Varies based on individual eligibility and requirements.
Typically based on the value of the vehicle being financed.
Interest Rates
Competitive rates are based on individual credit profiles and lenders' terms.
Competitive rates are based on individual credit profiles and lenders' terms.
Loan Term
Typically shorter terms
Longer terms compared to personal loans
Flexibility
Designed specifically for vehicle financing.
Can be used for multiple purposes beyond car purchases.
Approval Process
Faster approval process.
May involve a more extensive verification and approval process.
Repayment Flexibility
Flexible repayment options based on lender's terms.
Varies based on the specific car loan and lender's policies.

Choosing the Right Option with Finnable

Now that you have a better understanding of personal loans and car loans, let’s discuss how to make the right choice:

  1. Assess Your Needs: Consider your primary purpose for the loan. If you require financing for various expenses beyond a car purchase, a personal loan from Finnable may be the ideal choice. However, if you’re specifically seeking vehicle financing, exploring their specialised car loans is recommended. 
  2. Evaluate Loan Terms: Compare the loan terms, interest rates, and repayment options for both personal loans and Car loans. Finnable’s knowledgeable team can guide you in understanding the details and help you choose the loan that best fits your financial situation and goals. 
  3. Consider Your Financial Profile: Your credit score, income, and existing debts play a significant role in loan approval and interest rates. Finnable takes these factors into account when assessing your loan application, ensuring you receive competitive terms and favourable rates based on your individual circumstances.

 

Summing Up

When it comes to financing a vehicle or meeting other financial needs, personal loans and car loans offer distinct advantages. Finnable, a trusted loan provider, offers personal loans with flexibility and competitive rates, as well as specialised car loans tailored to your automotive requirements. 

By carefully considering your needs, evaluating loan terms, and leveraging Finnable’s expertise, you can make an informed decision and secure the financing that aligns with your goals. With Finnable by your side, you can navigate the loan process with confidence and achieve your financial aspirations.

Amit Arora Finnable

AMIT ARORA

I am a seasoned retail banker with over 21 years of global experience across business, risk and digital. In my last assignment as Global Head Digital Capabilities, I drove the largest change initiative in the bank to deliver the end-to-end digital program with over US$1 billion in planned investment. Prior to that, as COO for Group Retail Products & Digital, I implemented a risk management framework for retail banking across the group.
Finnable Logo