How to get a loan for buying a car

Getting a car is a venture that requires some planning, especially since it will likely affect the economic outlook of an individual for some length of time. For a lot of people, being able to shell out the outright payment demanded of cars is a dream that hardly comes through in a hurry, although it can be worked towards. In the meantime, the need for a car might require that one gets financial help, such as loans to secure the cars. Before you make any concrete plans or arrangement, however, we advise you to research extensively, for instance, by visiting to determine the type of financing you require or prefer.

Is it better to get a car loan, or get a personal loan to purchase a car? In examining the two ways to finance a car, we hope the reader gains enough insight to choose the decision that best suits him/her.

  • If you get a car loan, you can only get a new car or used but under a decade old. If you obtain a personal loan, you can purchase any car you like.
  • With a car loan, your new car is the collateral, but with a personal loan, especially the unsecured personal loan, you require no collateral. This works because you secure the loan first, then expand it on the expenditure of your choice, the car inclusive.
  • Personal loans afford you plenty of different loan options, while car loans limit you to…cars.
  • The excess from funds secured from personal loans can also be used to meet other needs, unlike car loans where you access only the amount you need.
  • In favour of car loans, however, their rates are cheaper than personal loans.
  • It is also usually difficult to meet eligibility requirements for personal loans than for car loans; while it gets more expensive to obtain a car through a personal loan if you have poor credit.
  • With car loans, you can get options with add-ons like warranty, insurance and additional costs, but you do not get that advantage with a personal loan.

Ultimately, each person has to examine the pros and cons of car loans and personal loans to choose the ones which best work for them. Car services providers can also offer an abundance of information for people who are willing to do their homework. If you, however, choose to apply for a car loan, we advise that you go through a bank. Do not mind that it might require higher credit scores (if you have it), as banks usually offer more competitive loan rates than dealerships. You can opt for a bank loan if the interest and payment terms offered are better than the dealerships, and also ensure that the car dealership you choose is on the bank’s list of approved dealers to avoid any bottlenecks or technicalities.

It is important to bear in mind that when you acquire long-term loans to acquire a car, it builds equity more slowly than a short-term loan would. If you, therefore, decide to sell your car or trade it in earlier than you should, the money you earn might not cover the payment of the remainder of your car loan. Please note that car loans discussed here do not exclude financing options by car dealerships, except for those so stated.

The onus falls on the prospective buyer to consider all the financing options available: personal loans, car loans from the bank and car financing option by dealerships before committing to anyone.