Buying a car, you can take a dedicated car loan (secured against the vehicle) or a personal loan (unsecured). The car loan is usually cheaper. Here is the difference on ₹8,00,000 over 7 years.
Scenario: ₹8,00,000 over 7 years — a car loan at 9.5% versus a personal loan at 14%.
Side-by-side comparison
| Metric | Car loan (9.5%) | Personal loan (14%) |
|---|---|---|
| Monthly EMI | ₹13,075 | ₹14,992 |
| Total interest | ₹2,98,316 | ₹4,59,329 |
| Total payment | ₹10,98,316 | ₹12,59,329 |
Car loan (9.5%) vs Personal loan (14%) at a glance
| Car loan (9.5%) | Personal loan (14%) | |
|---|---|---|
| Security | Secured against the car | Unsecured |
| Interest rate | Lower (typically 9–11%) | Higher (typically 11–18%) |
| Ownership | Lender holds a lien until repaid | You own the car outright |
| Best for | Most car purchases | When a car loan isn't available |
The verdict
A car loan almost always costs less than a personal loan for the same amount because it is secured and carries a lower rate — the personal loan's extra interest adds up to a lot over seven years. Take a personal loan for a car only if you can't get a car loan or want to own the vehicle free of any lien.
Model your own numbers with the Car Loan EMI Calculator and the Personal Loan EMI Calculator.