The car refinance loan is essentially a secured loan like a home mortgage loan. However, the process is much simpler and much faster. The car refinance loans allow you to take a loan on your existing car, by pledging the car registration papers at the lender’s.
There is a difference between the traditional car loan and a car refinance loan – The former is used to purchase of a car while the latter is used to solve your money requirement by pledging a car you already own.
Just like a personal loan, there is no restriction on the end-use of a car refinance loan.
Interest rates on car-refinance loans are relatively lower compared to personal loans, although paper work could be more extensive. So, if you have a requirement for money and you own a car, the car refinance loan is a viable option when compared to the personal loan.
- Personal loan is an unsecured loan.
- Higher rate of interest when compared to car refinance loans.
- Loan amount on the basis of your monthly income.
- Relatively higher processing charges.
- Less paper work, thus quick loan processing.
- Car refinancing is a secured loan. Basically here you get the loan on the strength of your own car.
- Lower rate of interest when compared to personal loans.
- Loan amount up to 60-80 per cent of the actual car value.
- Relatively lower processing charges.
- More extensive paper work.