Can I get a personal loan for a car?

Would it be possible for me to take out a personal loan to buy my car? I’ve heard personal loans can be good alternatives to car loans, but I don’t really know if it would be better—or even make a difference.

Answer
Finances can be confusing, and plenty of people get mixed up in the terminology. While you can use a personal loan to buy a car, you should first consider the pros and cons.
When you buy a car with a personal loan:
  • Your risk of repossession is lower since your car won’t have a lien.
  • It’s unlikely that you’ll be asked for a downpayment.
But…
  • Personal loans tend to have a much higher APR than auto loans.
  • Personal loans typically have longer terms, so you’ll be paying more over a longer period.
When you buy a car with an auto loan:
  • It will be more affordable long-term since car loans typically have lower APRs.
  • Qualifying will be easier because car loans don’t require outstanding credit scores.
But…
  • You won’t have as much freedom when choosing your car since your lender will have age and model requirements that you’ll need to meet.
  • You’ll need to make a downpayment.
  • You risk repossession if you’re unable to make payments as agreed.
Regardless of which loan you decide to use, you’ll still need an affordable insurance policy. Luckily, Jerry’s here to help!
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 rate!
Liz Jenson
Answered on Nov 20, 2021
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