What are the disadvantages of buying a car with a personal loan?

One of the disadvantages of buying a car with a personal loan is that interest rates might be higher, because you're not securing the loan against the car you're purchasing. You're also in danger of borrowing more than you need and putting yourself further in debt when you might not have needed the amount you borrowed. Another disadvantage is that a personal loan might need a little more planning. Whereas some car loan providers will arrange the finance for you while you are in the dealership.

Which car loan is the cheapest loan?

The lower the interest rate the cheaper the car loan. However, the lowest interest rate doesn't always mean the cheapest loan. If a loan comes with high fees, you could find yourself paying more than if you had gone with a slightly higher rate. It's also hard to call out the cheapest loan when interest rates can fluctuate. One lender's rates can vary from between 6% to 24%, so the cheapest loan for one person might not be the cheapest loan for another.

What should I know about used car loans?

Used car loans may carry higher interest rates to compensate for the reduced value of the vehicle over time, and there will be restrictions on the age of the car.

Can I use the loan for non-vehicle expenses?

Car loans are for cars only, while personal loans may be spent at your discretion . Consider the cost of car insurance , licensing and registration, fuel, maintenance, repairs and related costs as well as the price tag of the vehicle itself.

Will I need to provide details of the vehicle for a personal loan?

No. It’s standard practice for lenders to ask about the purpose of the personal loan, but no specific vehicle details will need to be supplied unless you apply for a car loan.