Can a personal loan be used for a car?

I really need a car for work, but I’m also low on cash in other areas. I was already thinking about taking out a personal loan, but I don’t know if that would work for getting a car. Could I use a personal loan to buy a car?

Answer
In short, the answer is yes—you can use a personal loan to buy a car. But you should weigh the pros and cons and consider your other options before you do.
When you buy a car with a personal loan:
  • You have a lower risk of repossession since your car won’t have a lien.
  • You may not need to provide a downpayment.
  • You’ll have the freedom to choose any car you want.
That being said:
  • Personal loans come with high APRs, so you’ll end up paying a lot in the long run.
  • It might be harder to get a loan if your credit is bad.
Alternatively, car loans usually come with lower APRs, and you won’t need stellar credit to qualify. However, your car will serve as collateral on your loan, and you’ll only be able to choose a car that meets your lender’s conditions.
Regardless of what loan you choose, you’ll be fine as long as you keep up with your monthly payments. Remember, you’ll also need a new insurance policy once you buy a car.
To make sure you’re getting the best rate on the coverage you need, try Jerry. A licensed broker, the Jerry app can help you compare personalized quotes from over 50 top providers like Progressive and Nationwide for free. Jerry will even send you new quotes before your policy renews, so you always know you’re getting the best deal!
Liz Jenson
Answered on Nov 20, 2021
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