Should I get an Unsecured Personal Loan to buy a car?

 

Buying a car is no simple decision. From zeroing down on a particular car model to deciding whether you should buy it out-and-out or buy it on finance, there is n number of options. Since you are here, we consider that you have already finalized your dream vehicle and now you are stuck in the dilemma of buying it outright vs. buying a car on finance. Here we are to make your car buying experience painless and smooth as silk.

After your home, your car is the second most expensive thing that you will ever buy. Thus, you have an additional factor “running cost” to consider. With so many crucial elements to think it will be only wise to choose the best buying options carefully.

Is buying a car with cash profitable? 

Because you will have to pay interest on any finance agreement or loan, the only cheapest way to buy is the car to fund all or part of it in cash.

In case you opt for cash payment, be sure that after you have completed your car payment, you have enough savings left over for an emergency. In the event that you wish to buy a car outright, it would be better if you use a credit card for part payment so you can reap benefits from credit card purchase protection – paying just $200 of the total cost of the vehicle connotes the card company is equally accountable with the dealer should something go wrong. However, you have to pay off the bill in the next month.

Buying a car using a personal loan  

If you can’t afford cash and looking for taking a loan, then a personal loan is the best option given the condition that you have a credit score that is above 660.

You can avail a personal loan from any finance provider or a bank if your credit rating is good enabling you to spread the cost over one to seven years. Ensure that the loan is not secured against your home or else you will be risking your home if you fail to repay the loan.

It is always wise to conduct an underlying interest rate research by paralleling the APR before you apply for any loan.

Purchasing a car with a personal loan has its perks. Firstly, being the cheapest alternative to buying with cash, a personal loan can be arranged over the phone, face-to-face, or via the internet. It certainly does cover the entire cost of the car but doing so would be ill-advised. With a little research, you can get a cutthroat fixed interest rate.

Like every coin applying for personal loan too has two sides, you might have to wait before the funds are transferred to your account. However, some lenders transfer the fund immediately. Financing for a car loan may affect another borrowing that you have in your mind.