Personal Loan for a Car

A personal loan for a car is a loan that is given most of the time without the security of the car to be purchased. It is an unsecured loan that is preferred when you do not want to take a secured loan against the car or if the car you want to purchase does not qualify for a loan as per normal lending guidelines of banks and financial institutions. For example, if you want to purchase an old model of a car or a low value vehicle, then most banks would either not extend the loan or charge a very high interest rate. There are secured loans also available against the car that you are going to purchase, which may be quite cheap and you need to carefully compare this with an unsecured personal loan.

The personal loan also has a flexible contract term, with repayment period ranging from two to seven years. The loan can be taken at either a fixed or variable rate of interest depending on your expectation about future movements of interest rates. Most banks require some upfront cash deposit, which is about 10 to 15% of the loan amount. The approval norms for the loan are not very stringent and you can bargain for quite flexible terms and conditions as per your requirement. If the vehicle is to be used for business purpose, a tax deduction is also available for depreciation and running cost on a pro-rata basis based on the percentage of business used, which may work to your advantage.