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Should I use a personal loan to buy my car?

When using a personal loan to buy a car makes the most sense.

Cars aren’t a great investment when it comes to returns, but they can make life so much more convenient. If you don’t live in an urban neighborhood, you might not have reliable public transportation. For many people, a car is the only way to get to where they need to go. For others, a car is a major convenience. Helping them get children to school or their activities for example. It also makes it easier to see family and maintain friendships when loved ones don’t live next door.

Unfortunately, cars are not cheap. For the most part, it’ll cost you more than a few hundred dollars to purchase a vehicle, even a used one. Many people have less than $500 in savings. If you live paycheck to paycheck or have a tight budget, saving up for a car might not be reasonable. If your car breakdown or needs expensive repairs, you might not have enough time to save up for a new car. That’s when a personal loan can come in handy.

When to use a personal loan to purchase a car.

A personal loan may be the best option for you if you are buying a used car from a person or somewhere outside of a dealership. If you are looking to purchase a new car or used car from a dealership, you might get a better deal by going with an auto loan. The interest rates tend to be cheaper because auto loans are secured loans backed by your vehicle. The downside is your vehicle can be impounded if you miss payments.

Another benefit of using a personal loan to purchase a car is that you can sell your car before paying it off. If you decide you don’t like your car, a personal loan means you’re not stuck with it until you have completely paid it off.

Personal loans can be used to cover a wide range of expenses including consolidating debt. You could consolidate the cost of your car and high-interest debt if you get approved for enough funding. For example, if you have a high-interest credit card, you could pay off the balance with a personal loan. Personal loan rates tend to be cheaper than most credit card rates. Your credit card balance, plus the cost of your new car would be managed under one loan with one interest payment. That can save you money and make it easier for you to manage your debt.

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This post is not intended to be a solicitation for a loan. BrighterPays provides these blogs for entertainment and informational purposes only. Remember to consider all your financial options before making any decisions related to credit.