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Buying a car with a personal loan

Need to finance your car purchase? Find out if a personal loan is worth it.

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There are a few financing options that you can choose from if you want to buy a car. While you might immediately think of checking out which car loans are available to you, you may also want to consider a secured or unsecured personal loan. These loans can give you different benefits to a car loan. Find out more in this guide.

Young male student entering car on roadside


Personal loans vs car loans: The basics

Personal loansCar loans
Which cars can you finance?Any carNew and used cars up to a certain age
Pros
  • Flexibility in the type of car you can purchase
  • Range of loan options
  • Can use the funds for additional purposes
  • Designed to purchase a car
  • You can apply for a higher loan amount
  • Competitive rates
  • Access to additional add-ons such as warranty
Cons
  • Higher interest rates than car loans
  • Eligibility requirements may be stricter
  • Restrictive of the type of car you can purchase
  • You can't use the loan for additional purposes

Plenti Fixed Rate Personal Loan

Plenti Fixed Rate Personal Loan

From

6.49 % p.a.

fixed rate

From

6.84 % p.a.

comparison rate

  • Get a personalised comparison rate based on your credit score
Security Logo

100% confidential application

Plenti Fixed Rate Personal Loan

Plenti offers this unsecured personal loan with a fixed or variable rate. Receive a tailored interest rate from 6.49% p.a. based on your risk profile.

  • Interest rate from: 6.49% p.a.
  • Comparison rate: 6.84% p.a.
  • Interest rate type: Fixed
  • Application fee: From $149 to $599
  • Minimum loan amount: $2,001
  • Maximum loan amount: $45,000
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Personal loans compared

Data indicated here is updated regularly
$
Name Product Interest Rate (p.a.) Comparison Rate (p.a.) Min Loan Amount Loan Term Application Fee Monthly Service Fee Monthly Repayment
Plenti Fixed Rate Personal Loan

From 6.49% (fixed)
6.84%
$2,001
3 to 5 years
From $149 to $599
$0
You'll receive a fixed rate between 6.49% p.a. and 11.99% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 3 years. Interest and comparison rates calculated for a loan term of 5 years.
Harmoney Unsecured Personal Loan

From 6.99% (fixed)
7.79%
$2,000
3 to 5 years
$575 ($275 for loans of below $5,000)
$0
You'll receive a fixed rate between 6.99% p.a. and 25.69% p.a. based on your risk profile.
Apply for a loan up to $50,000 and repay your loan over 3 or 5 year terms.
OurMoneyMarket Personal Loan

From 6.75% (fixed)
6.96%
$2,001
1 to 7 years
1.5–6% of your total loan amount
$0
You'll receive a fixed rate from 6.75% p.a. to 20.99% p.a. based on your risk profile
A personalised loan from $2,001 to $75,000 that varies based on your credit history and financial situation.
Alex Personal Loan

From 6.95% (fixed)
6.95%
$2,100
6 months to 5 years
$0 (waived $295)
$0
You'll receive a fixed interest rate from 6.95% p.a. to 19.99% p.a. based on your risk profile
Borrow between $2,100 and $30,000 from 6 months to 5 years. Benefit from no ongoing fees. Note: The establishment fee of $295 is waived for all applications until 31 October 2020. Terms & conditions apply.
SocietyOne Unsecured Personal Loan (2-3 years)

From 6.99% (fixed)
6.99%
$5,000
2 to 3 years
from 0% to 5% (capped at $995)
$0
You'll receive a fixed rate between 6.99% p.a. and 17.99% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
SocietyOne Unsecured Personal Loan (5 years)

From 7.99% (fixed)
7.99%
$5,000
5 years
from 0% to 5% (capped at $995)
$0
You'll receive a fixed rate between 7.99% p.a. and 20.49% p.a. based on your risk profile
A loan from $5,000 to use for a range of purposes. Benefit from no ongoing fees and no early repayment fee.
Plenti Variable Rate Personal Loan

From 5.79% (variable)
6.78%
$2,001
1 to 3 years
From $149 to $599
$0
You'll receive a variable rate from 5.79% p.a and 11.99% p.a. based on your risk profile
A flexible loan with amounts from $2,001 and terms starting from 12 months. Benefit from transparent costs and a rate estimate before you apply.
NAB Personal Loan Unsecured Fixed

From 9.99% (fixed)
10.88%
$5,000
1 to 7 years
$150
$10
You'll receive a fixed rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes and pay off over up to 7 years. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
Symple Loans Personal Loan

From 5.75% (variable)
6.47%
$5,000
1 to 7 years
from 0% to 5% of the loan amount
$10
You'll receive a personalised interest rate from 5.75% p.a. to 21.99% p.a. based on your risk profile
Borrow up to $50,000 to pay for what you need.
Wisr Personal Loan

From 7.95% (fixed)
8.78%
$5,000
3 to 5 years
$595 (Establishment Fee)
$0
You'll receive a fixed rate between 7.95% p.a. and 19.45% p.a. based on your risk profile
A loan from $5,000 that charges no fees for extra or early repayments. Keep in mind security is required in some cases.
Heritage Bank Fixed Personal Loan
7.99% (fixed)
8.62%
$5,000
1 to 5 years
$200
$5
Choose a fixed rate loan and receive a comparison rate of 8.62% p.a.
Fixed rate loans are available up to $100,000 on terms from 1 to 5 years.
CUA Unsecured Fixed Rate Personal Loan
9.89% (fixed)
10.14%
$5,000
1 to 7 years
$175
$0
You'll receive a fixed rate of 9.89% p.a.
An unsecured loan from $5,000 with flexible repayments and no monthly fee.
NAB Personal Loan Unsecured Variable Rate

From 9.99% (variable)
10.88%
$5,000
1 to 7 years
$150
$10
You'll receive a variable rate between 9.99% p.a. and 18.99% p.a. ( 10.88% p.a. to 19.83% p.a. comparison rate) based on your risk profile
An unsecured loan up to $55,000 you can use for a range of purposes. Benefit from fee-free additional repayments and a redraw facility. Note: Majority of customers will get the headline rate of 12.69% p.a. (13.56% p.a. comparison rate) or less. See Comparison rate warning in (i) above.
CUA Unsecured Variable Personal Loan
11.89% (variable)
12.15%
$5,000
1 to 7 years
$175
$0
You'll receive a variable rate of 11.89% p.a.
Borrow from $5,000 with the option for flexible repayments and no monthly fees.
Heritage Bank Standard Variable Personal Loan
11.99% (variable)
12.61%
$5,000
1 to 10 years
$200
$5
Choose a variable rate loan and receive a 12.61% p.a. comparison rate
Variable rate loans are available from $5,000 - $100,000 on terms of 1 to 10 years.
MoneyMe Personal Loans

From 8.99% (fixed)
10.68%
$3,001
2 to 5 years
5 - 8% of the principal borrowed, capped at $1,200
$0
You'll receive an interest rate between 8.99% p.a. and 29.99% p.a. based on your risk profile
A flexible personal loan from MoneyMe with access to cash when you need it.
Latitude Personal Loan (Unsecured)

From 7.99% (fixed)
9.24%
$3,000
1 to 7 years
$250 (Loans under $5000 - $140)
$13
You'll receive a fixed rate between 7.99% p.a. and 19.99% p.a. based on your risk profile
Apply for what you need from $3,000 and use it for a range of purposes. Repay weekly, fortnightly or monthly.
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Compare up to 4 providers


How does a personal loan work for financing a car?

Personal loans work in a very similar way to car loans, with a few notable differences. Just as you would with a car loan, you apply with a personal lender for the amount that you need (this amount can include enough for purposes outside of financing a car, which car loans don't generally allow). A key difference here is that you don't need to supply the details of the vehicle, you simply need to tell the lender what you plan to do with the funds.

Once you've received the loan amount, you can use it to purchase the vehicle along with anything else you needed the loan for. Loan terms can be for between one and seven years and you can generally borrow between $3,000 and $70,000.


What are the benefits of using a personal loan?

While a car loan may be better suited in certain situations, personal loans do offer a range of benefits to those looking to finance a vehicle:

  • Flexibility with approved funds. The amount you can borrow with a car loan is generally tied to how much the car costs. However, a personal loan is not restricted in this way, allowing you to borrow additional funds for insurance, modifications or even to consolidate other debt.
  • You can buy a used car. While some car loan lenders will allow you to purchase a used vehicle (provided it's under a certain age), you can finance any car you want with a personal loan. This includes classic vehicles and used cars over the usual age limit.
  • Range of lenders. You may find a larger range of lenders and loan options to choose from if you opt for an unsecured personal loan from a bank rather than a car loan.

What type of financing should you opt for?

Not sure what type of finance to opt for? Consider the following situations:

buying new car from a dealership

A new car from a dealership

In this situation, it may be better to opt for a car loan or dealership finance, unless you want to borrow above the cost of the car. You will be able to get a more competitive rate and may have access to convenient features.

used-car-private-seller

A used car from a private seller

Depending on the age of the vehicle, you may be able to choose between a personal loan or a car loan. Keep in mind the restrictions and the cost of the loan when making your decision.


How much does a personal loan cost?

Personal loans come with a variety of fees and charges that should be considered before you apply:

  • Interest rate. This rate can either be fixed or variable and can range from 7% p.a. to 20% p.a. depending on the type of loan you opt for and your borrowing situation.
  • Establishment fees. You may need to pay a fee to set the loan up. This can be called a loan establishment fee, a loan application fee or a loan origination fee, but it will essentially be the same thing. Once the loan is approved, the fee will be added to your borrowing amount.
  • Ongoing fees. Personal loans may come with monthly or annual fees that will increase your ongoing repayments. Make sure to consider these when comparing your options.
  • Late payment and default fees. If you make a loan repayment late or you fail to make a repayment you will be charged additional fees. These may be daily late fees, direct debit dishonour fees or more. Make sure you get in touch with your lender if you think you'll be late with a repayment to avoid these.

What are the drawbacks of a personal loan?

Choosing a personal loan to finance a car isn't all positive. Here are some of the drawbacks to consider:

  • Costs. Compared to a car loan, you will generally find that personal loans have higher interest rates.
  • No special car offerings. As car loans are designed for car purchases, car loan lenders usually offer features such as car-buying services or car insurance add-ons as part of their loans. These generally aren't available with personal loans.

Which is better for buying a car: A personal loan or a car loan?

Whether a personal or car loan is better will depend entirely on your preferences and circumstances. As mentioned above, there are pros and cons to each.

Car loans are usually (but not always) secured by the vehicle. This can make them more cost-effective than some (but not all) personal loans. It may also mean their eligibility criteria is less stringent. That being said, car loans are generally inflexible and can't be used for any purchases other than the car in question.

Personal loans are considered to be generally more flexible. This means that you can finance your car purchase, as well as additions such as your car insurance, or something else entirely unrelated. Personal loans can also be secured or unsecured, depending on your circumstances and preferences. Secured personal loans, like secured car loans, will usually have lower interest rates than unsecured personal loans.


What different types of personal loans are there?

There are a number of different personal loan options that you can use to finance a car. These include:

  • Fixed rate

    A fixed rate personal loan is a loan in which the interest rate does not change for the life of the loan. This can be useful for budgeting and gives you the confidence that your repayments will never increase. However, fixed loans are generally inflexible and may charge you penalty fees should you choose to pay off the loan early. Fixed rate personal loans usually have terms of up to five years.

  • Variable rate

    A variable rate personal loan is a loan in which the interest rate can either go up or down over the life of the loan. While you run the risk of a rate increase, variable rate loans are usually flexible and rarely charge early repayment fees if you choose to pay off the loan early (meaning that if your rate does increase, you could opt to refinance and move to a different loan). Variable rate loans usually have terms of up to seven years.

  • Unsecured

    Unsecured personal loans are flexible loans that are not secured by an asset as collateral and can be used for almost any legitimate purpose. This type of personal loan may have a higher interest rate and/or fees than other forms of personal finance. Unsecured personal loans can be either fixed or variable.

  • Secured

    As previously mentioned, a secured personal loan is usually more cost-effective than an unsecured loan. You can often choose to secure a secured personal loan with the car that you're buying or one that you already own. You can also secure personal loans with other assets, such as valuable jewellery, art or the equity in your home. Secured personal loans can be either fixed or variable.


How to decide what's right for you

Finding the right financing option for you comes down to cost, features and flexibility. First, make sure the loan type suits your purchase. Then, consider the features that are available with each loan type – do these suit your needs? After this, compare the costs of the most suitable loan options and select the most affordable for your budget.


More guides on Finder

Car Loan Offers

Important Information*
Logo for IMB New Car Loan
IMB New Car Loan

You'll receive a fixed rate of 4.99% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.

Logo for Beyond Bank Low Rate Car Loan "Special Offer"
Beyond Bank Low Rate Car Loan "Special Offer"

You'll receive a fixed rate of 4.89% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.

Logo for RACV New Car Loans
RACV New Car Loans

You'll receive a fixed rate from 4.99% p.a.
A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.

Logo for NRMA New Car Loan
NRMA New Car Loan

You'll receive a fixed rate of 4.99% p.a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.

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