6 Differences You Should Be Aware Of Between Personal Loans and Car Loans
Every person gets confused between a Maybank Philippines personal loan. Though the meaning of either of the term is almost same, the applicability of personal loan is much wider and a broader aspect.
By definition, a personal loan is offered for fulfilling the needs apart from that being offered as dedicated loans. Here, dedicated loans refer to home loans, car loan, and such. The usage of the fund is completely private between the client and the financial institution.
On the other hand, a car loan is offered for purchasing a new car. It is only offered at the time when the car is to be purchased. The car company will offer the service of a car loan company, which offers the best deal possible.
What to go for?
Obviously, when purchasing a car, a person will have to go for a dedicated car loan. No company will allow funds through a personal loan for purchasing a car, whether it is a private institution or a government institution.
Therefore, a person shall not even apply for a personal loan because it may reduce the credibility of an individual in the eyes of the firm on the account of the application being rejected.
Differences between car and personal loan
Following are the key differences between car and personal loan:
- Time duration: The personal loans are offered for a relatively short duration than a car loan. For a car loan, a financial institution also allows for shorter minimum return periods while in personal loan, a charge is applicable when the amount due is paid earlier than the date due.
- Tasks covered: Under car loan, the task of purchasing car only is covered. While in the personal loan, a person can apply for a wider range of tasks. For example, purchasing furniture, coping with financial loss, etc.
- Interest rate: The rate of interest for the car loan is lesser than a personal loan. As the loan is for a shorter duration, the banks charge a high rate to earn more. Please note that the rate of interest may vary with the type and the purchase cost of the car.
- Payment mode: There are many payment means available for either of the loan types. A person can use both cash and cash equivalents to pay off the debt amount.
- Time of issuing: The loan for a car is sanctioned at the time of purchasing the car. However, the personal loan is available at any time, irrespective of the consideration time.
- Documents needed in the processes: For getting a car loan issued, a person has to get the purchase papers alongside the loan application documents. On the other hand, the person needs to submit only the documents asked for by the institution offering loan. The documents needed may vary with the need, so confirm before applying for the loan.
The personal loan Philippines are easier to obtain. But, in our case, case loan is the only option. Before applying, it is recommended to read all the terms and conditions to avoid any confusion later on.