When is a personal loan better than a car loan when you're financing a $5,000 vehicle?

"I have a credit score in the mid-600s and I have my eye on a $5,000 vehicle. I'm not sure if I'd be approved for a car loan, but I think I can get a personal loan. Is a personal loan a better way to purchase a vehicle?"

Answer
“In almost zero cases is a personal loan a better idea than a car loan. Your interest rate will almost certainly be three to five times higher.
If you can’t get approved for an auto loan because of your credit score, you need to think about your finances in general. For example, why do you need a $5,000 car when a $2,500 car will do?
Instead of taking on more debt, pay cash for a car and work on restoring your credit by paying down other debt. That’s the best advice I can give you.”
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Eric Schad
Answered on Jul 23, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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