You’ve found the vehicle you want to purchase and have weighed up all the pros and cons of one model versus another. You’ve probably looked at the relative advantages of different types of vehicles in great detail and spoken to motoring experts along the way.
Few of us can afford an outright purchase, so you need to think carefully about financing your vehicle. Do your research to find the best finance option for your needs. Australians have the freedom to choose between a car loan or personal finance.
In essence, the main difference between the two is that a car loan is specific to the cost of the car, while a personal loan can be for anything, but in this instance, you would apply it to your new vehicle.
Typically, a personal loan isn’t as secure for both the lender and purchaser as a car loan and can come with higher interest rates.
- What are the advantages of a car loan?
If the vehicle you have your eye on comes with a high price tag, a car loan may be the better option as you’ll be able to borrow more money with this type of financing.
It’s also a cheaper option based on lower interest rates if you’re planning to keep your vehicle for a while. Remember that you can’t sell it before you’ve made all the scheduled repayments. If you’re confident that you’ve chosen the car you want and will keep it, then there’s no problem with this option.
Most Australians choose a car loan when purchasing a new vehicle, but the decision is ultimately based on your circumstances. If you’re anticipating a financial change in the future, then you might potentially want to consider a personal loan in the long run.
- Why a personal loan won’t necessarily cut it?
Mainly, the biggest downfall of a personal loan in this instance is that it will come with a higher interest rate. Which means over the course of the loan, you’ll be paying more than you need to. The second part is that you won’t always be guaranteed of securing the loan in the first place – it can be much harder to get the finance than a car loan, especially if you have bad credit.
As you did when choosing your vehicle, you need to consult an expert who can provide you with the best advice to match your needs. Speak to the car loan experts at Simply Finance to help you make the right decision.