Buying a Car with a Personal Loan

24 Jul 2007 Tell a Friend

Do you dream of owning a new car? Rather than having to come up with all the money at once, you can take out a personal loan to pay for the car, thereby allowing yourself the opportunity to pay the amount in manageable payments instead of in one lump sum. Most frequently, an unsecured loan is the type you will take out to purchase a car, but a secured personal loan may also be an option, depending on the amount that you need to borrow.

Along with your loan, you lender can provide you with a number of add-ons to help make your car buying experience easier. They can offer you the option of picking your monthly payment date, payment protection insurance, and payment holidays. All of these options give you the opportunity to tailor your loan to meet your specific needs.

Many different lenders offer secured personal loans for the purpose of buying a car. Banks, building societies, and specialised lending companies are some of the sources you can go to for this type of loan. If you want to do some research before deciding on a personal secured loan, the internet is a great tool. There are some websites that are equipped with online secured loan quotation systems. Some sites even allow you to compare several quotes side by side so that you can see your options and to choose the loan that is right for you.

As stated above, a secured loan is a loan that requires you to provide something as collateral to your lender. You could use your house, other real estate, or a savings account as collateral. Any of these things will work as long as its value is 25 per cent (or more) greater than the value of the car you are purchasing. When taking out a secured loan to purchase a car, your APR will be relatively low because your lender has your property as security. The approval process may take a while because with a secured loan there is the extra step of the lender having to determine the value of the property you put up as collateral.

Taking out a secured personal loan for the purpose of buying a car may be a better deal for you than using dealer financing to purchase your car. If you take a loan out through a bank or lending firm, you will not be tied to one dealership for the term of the loan.