Ask Finder: Can I buy a second hand car with a car loan?
Are there any restrictions on borrowing for a used car?
Can I buy a second hand car with a car loan? Or is there some other kind of loan I'd need to look at?
Thanks,
Roadworthy
This is a common question and the simple answer is that: yes, you can use a car loan for a second hand car. Most lenders will let you borrow money to finance either a new or used car, provided you meet their lending criteria. The requirements can vary depending on the lender and the type of loan, with both secured and unsecured car loans available.
Generally, the only instance in which you may not be able to get a car loan for a used car is if you're applying for a secured car loan. With a secured car loan, the car you buy is used as security against the cost of the loan. In the event that you do not repay the loan, the lender make take ownership of the vehicle.
Some lenders will only offer secured car loans to those looking to buy a new car, but most will also allow you to get a used car, provided the car is not over a certain age. The vehicle age restriction will vary by lender, so if you're planning on buying a used car, you should check it meets the specific age requirements of the lender before applying for a loan.
In comparison, an unsecured car loan doesn't require the vehicle as security. This means you can use the funds to pay for a new or used car without the vehicle requirements you would have with a secured loan.
You can check out this used car loans guide to learn more about loans for used cars and compare your options. Or, if you're still looking for a nice second hand car, this buying guide is a good place to start.
Ask Finder is a regular column where Finder's expert writers answer your questions. All rates and fees are correct at time of publication and we only give general advice.
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