Introduction
Buying a vehicle is never a simple decision. You have to choose the right kind based on your suitability. The most important decision regarding a car purchase is financing it. Some people choose the option of buying a car with their savings, while others opt for personal loan to buy a car.
A car loan is a type of personal loan which is availed for the purpose of buying a car. You can apply for a personal loan in Chennai, Delhi, Pune, or any other city you are residing in. In the following article, we will look into 6 reasons why a car loan is a better option to buy a car.
Reasons for availing a Car Loan
● Improves Credit History: People who want to buy a car have two basic options. Either they can dig into their savings and pay upfront for a car, or they can apply for a car loan. The latter option is always better as it improves your credit score. If you take a loan and make timely payments through EMIs, your credit score will strengthen. Good credit history is very important for future borrowings. Some lenders provide instant car loan, which can be beneficial for building a positive CIBIL score. Your future loans and borrowings would be favorably affected if you opt for a car loan today.
● Customizable Tenure: Under a car loan, you have the freedom of choosing your tenure. The loan repayment period is crucial when it comes to managing your finances. You can be at ease when the repayment of the loan is under your control. In the case of a car loan, lenders offer you to customize your loan tenure. You can choose to repay your loan for a period of up to 36 months. To buy a car, you can avail of a personal loan in Chennai, Delhi, Mumbai, and many other cities at nominal rates.
● No Collateral: Contrary to other loans, a car loan does not require collateral. Personal loans for other purposes need something in the form of collateral against the borrowed money. People use mortgages and other sources to submit collateral. In the case of a personal loan to buy a car, the vehicle itself acts as collateral. You do not have to submit anything in the form of security to avail a car loan. Even in the case of an instant car loan, lenders do not ask for collateral. It makes this process all the more convenient.
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● Long-Term Payments: A car loan enables you to pay off your debt over a long period. If you buy a car using the money from your savings, you have to pay the entire amount at once. It increases the burden on your savings, and managing your finances becomes difficult. In contrast, a car loan is paid off through EMIs, which are far lighter in your pocket. Paying a definite amount of money every month gives you peace of mind and does not create an unnecessary burden on your finances. You can ask your lender to create EMIs as per your suitability when applying for a personal loan in Chennai, Pune, Delhi, and many more cities.
● Safeguards Savings: The most important reason you should opt for a car loan is the protection of your savings. If you buy a car with your savings, you have to spend a considerable chunk of money from your saved funds. Acquiring money and not spending it takes a lot of perseverance. Spending a big part of it on something at once is not easy. A car loan lets you safeguard your hard-earned savings and lets you own a vehicle as well. This way, you do not have to worry about your fund balance. You must keep your savings for an emergency or unplanned situation in the future.
● Tax Benefits: You can receive tax benefits from your car loan if you are self-employed. You would be eligible for tax deductions under Section 80C as per the provisions of the Income Tax Act, 1961.
Conclusion
In conclusion, buying a car through a loan is better in many ways. Car loans not only help you in managing your finances properly; they also help build your credit score. If you look at all the points discussed above, you can choose to buy a car on simple terms through a car loan.