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?"
“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.”
Did this answer help you?
Ask us a question by email and we will respond within a few days.
Have a different question?
You can meet us at our office and discuss the details of your question.
Read advice from car experts at Jerry
Browse by topics
What others are asking
Will police departments jumpstart vehicles?
Will the police help me if I call and ask for a jump? I have an old battery and I'm fully ready for it to break down on the highway soon.
Jul 22, 2021
Why won't GEICO cover me in a hit and run?
"It wasn't my fault, but another driver hit me and fled the scene. GEICO is refusing to pay. Why?"
Jul 27, 2021
How far does car insurance tow your car?
How far will a towing and labor coverage policy tow your car? I'm shopping around for car insurance and I want to add towing and labor coverage to my policy.
Jul 20, 2021