When purchasing a new car, most buyers would typically waltz into the showroom of a preferred marque, sample what the brand has to offer, then let the dealer process the rest of the loan paperwork for you.
The general process is the same when acquiring a used car. Dealers often have loan packages, either from an in-house source or with a tie-up with a financial institution, with varying interest rates and loan amounts.
There’s another option when it comes to financing used cars, which we’re sure is an avenue some would have entertained when all else fails – a Personal Loan. But just which type of loan suits your use case the best?
Personal Loan
In a nutshell, banks will disperse the full sum of cash to an account of your choosing when you apply for a personal loan. This means that you can purchase the car outright, though as we pointed out above, there is literally a price to pay for this convenience.
If you’re do not have the hefty sums of cash needed for the deposit of a car loan, and are okay with the higher monthly instalment, this is an avenue for you to consider – though do note that doing so will greatly impact your credit score!
Car Loan
You can obtain a car loan from a few different sources. Used car dealers often have their own in-house loans, which may or may not be aligned with the typical MAS guidelines that other financial institutions have to follow. Firms in the latter category will need adhere to strict loan guidelines, which means you having to put a 30-40% deposit upfront before the loan is even approved.
Motorist Car Loan
You’ll want to use this avenue when purchasing a used car from a direct seller. Apart from having competitive interest rates, courtesy of both our in-house loan and with tie-ups from our banking partners, our loan options are flexible too.
Which Offers Lower Interest Rates?
Each of the abovementioned loan packages have a different appeal. Personal loans work for you, if you do not have the requisite downpayment amount to qualify for anything else. Car loans do offer a lower interest rate typically, but as they are heavily regulated, the terms of the loan may be inflexible, and you may still have to do a fair bit of paperwork on your end.
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Keyword: Should I Use A Personal Loan Or A Car Loan To Purchase My Next Car?