What are personal car loans and how do they work?
A personal loan is a type of borrowing that allows individuals to borrow money for a period of time and repay it with interest. Personal loans typically involve an agreement in which a fixed amount is borrowed and repayment terms are agreed upon. Personal loans can be used for many different purposes, including buying a car.
With personal car loans, you borrow the money before buying a car. Unlike a lot of other types of car finance, you’ll instantly own the car once it’s purchased. You will then need to pay the loan back to the lender with interest on top.
Securing personal car loans
With Car Finance Saver, you’ll find the right personal car loan in an instant. We’ve partnered with Monevo who can provide you with access to dozens of lenders with tailored and competitive finance deals. It won’t be long before you’re in your new set of wheels!
To find personal car loan quotes, fill out the application form and answer the simple questions provided. This will help to assess your eligibility, without affecting your credit score. Once you’ve completed the application, you’ll receive a list of personal loan lenders. Your chosen lender will then deal with your application.
Is a personal loan the right option for me?
When considering whether a personal loan is the right option for you, there are several things to consider. Firstly, how much money do you need to borrow? Terms and conditions will vary between lenders, depending on how much you wish to borrow. This may include interest rates, repayment periods and additional fees associated. Secondly, what is your current financial situation? Personal loans are generally unsecured loans that require no collateral or security deposit; however, some lenders may require higher credit scores or more secure forms of income in order to approve a loan application.
As with any type of loan, it’s important to do your research when considering a personal loan for your car purchase. Shopping around for different lenders with us will help ensure that you get the best possible deal for your needs. Read through all of the fine print before signing any documents, and don’t hesitate to ask questions if there’s something that isn’t clear. Doing this ensures that taking out a personal loan is the best option for your individual situation.
Advantages & disadvantages of personal car loans
While personal car finance offers several benefits, it also has its downsides. The primary advantage is the lack of collateral requirement, meaning borrowers don’t risk their assets if they’re unable to make loan repayments. This factor can make personal car loans an attractive option for those wary of putting their property on the line.
However, this type of financing is not without its disadvantages. The most significant drawback is the typically higher interest rates associated with personal loans, a direct result of the increased risk to lenders when no collateral is provided. Additionally, the terms of repayment can vary greatly, depending on the loan amount and the borrower’s ability to repay, which can introduce uncertainty into budget planning.
| ✅ No collateral required | ❌Higher interest rates |
| ✅ Lower risk for borrowers | ❌ Variable repayment terms |
| ✅ Increased accessibility | ❌ Budget management required |
Frequently asked questions about personal car loans
What is a personal loan?
A personal loan is a type of unsecured loan that can be used for any purpose. Personal loans don’t require collateral, like a car or house, and are often used for large purchases or to consolidate debt. These loans are typically paid off over time with fixed monthly payments, making them easier to budget for.
What is a personal car loan?
A personal car loan is a type of personal loan that can be used specifically towards the purchase of a vehicle. You are given the loan to help purchase the car.
What information do I need in order to apply for a personal car loan?
In order to apply for a personal car loan, you will usually need proof of identity such as your driver’s licence or passport, proof of income, proof of residence, and information about the vehicle you intend to purchase including make/model/year, price, mileage etc. Application details will vary between lenders.
How much money can I borrow with a personal car loan?
The amount that you can borrow with a personal car loan will depend on your credit score and financial situation. Always ensure that you can comfortably make the monthly payments before agreeing to a loan.
Does bad credit affect a personal loan application?
Having bad credit does not mean you will automatically be denied a loan; however, having poor credit may make it more difficult to find lenders willing to provide you with good rates and terms. Applicants with bad credit may be offered higher interest rates than those who have better scores because lenders view them as higher risk borrowers. If you’re applying for car finance with bad credit, you may benefit from a lender specifically tailored towards this.
