Personal Loan vs Car Loan: Which Is Right for You?

Do you need to take out a loan for one reason or another? In this day and age, there are all different types of loans you can apply for.

Personal loans and car loans are two of the most popular kinds of loans. You might want to consider taking out one or the other the next time you’re in need of a loan.

Before you do, though, make sure you understand the difference between a personal loan vs car loan. They’re two very different types of loans when it comes right down to it.

So, what is a personal loan, what is a car loan, and what sets them apart? We’re going to discuss each of these things today. We’re also going to touch on the benefits of a personal loan as well as the benefits of a car loan.

Continue reading to learn about a personal loan vs car loan so that you can decide which one might be your best option.

What Is a Personal Loan?

Of all the different types of loans that are available today, you could argue that personal loans are probably the most popular among Americans. About 19 million people have personal loans that they’re repaying at any given time.

When taking out a personal loan, you can choose to borrow as little as just $100 or as much as $35,000, if not more. You’ll be able to decide exactly how much money you need when you fill out a personal loan application.

Unlike car loans that are used exclusively to pay for new and used vehicles, personal loans can be used for almost anything you want. You can apply for a personal loan and use it to pay for:

• Emergency car repairs
• Medical bills
• Home improvements
• And so much more

In some cases, people will even take out personal loans to pay for things like vacations or holiday gifts. As long as you’re able to qualify for a personal loan, you can get your hands on as much money as you need and use it to pay for whatever you might want to use it for.

What Are the Benefits of a Personal Loan?

The freedom and flexibility that you’ll enjoy when you take out a personal loan are two of the biggest benefits of a personal loan. You’ll appreciate being able to use a personal loan for whatever you want.

These aren’t the only benefits of a personal loan, though. You’ll also get access to a whole host of other benefits when you go to try to take out a personal loan. Here are a few of them:

• You can usually get approved for a personal loan fast and get cash deposited into your bank account within just a few days
• You can often choose how long you would like to take to repay a personal loan
• You can typically take out a personal loan without having to secure it with collateral

The benefits of a personal loan are a big part of the reason why so many Americans decide to take out these types of loans in the first place. People have come to appreciate how effective they can be when they need to get their hands on cash quickly.

How Can You Get a Personal Loan?

If you’re interested in the idea of taking out a personal loan, it should be simple enough to do it. Here are the steps you’ll need to take to acquire a personal loan:

• Look around at the different personal loan lenders and pick the best option of the bunch
• Fill out an application for a personal loan and provide a lender with information about yourself
• Select the personal loan option that looks good to you after being approved for a loan
• Obtain the money you need and use it for whatever you want
• Work on repaying a personal loan

In total, it should only take you a few days, if that, to get a personal loan. It’s extremely easy to apply for a personal loan and have money deposited right into your bank account.

What Is an Auto Loan?

While personal loans can be used for almost anything you want, auto loans are a little different. As their name would suggest, these types of loans can only be used for buying new and used vehicles.

As a result, you aren’t going to be able to qualify for an auto loan if you need money for, say, a medical bill or even an emergency car repair. You need to be getting ready to buy a new or used car to get approved for an auto loan.

Unlike personal loans that are usually unsecured, auto loans are secured by the vehicles that they’re used to buy. So if you ever stop repaying an auto loan, a lender can technically take a car back from you and sell it to recoup their losses.

What Are the Benefits of an Auto Loan?

At first glance, it might appear obvious that personal loans are better than auto loans based solely on the fact that they’re unsecured. But it’s worth noting that there are many benefits of an auto loan that you’ll enjoy when taking one out.

For starters, many auto loans tend to have lower interest rates than personal loans. This is because lenders know that people will have the incentive to pay back their loans since they’ll be secured by their vehicles. Most people won’t want to run the risk of having lenders repossess their cars, trucks, and SUVs.

Depending on your credit score, you might also be able to borrow more money with an auto loan than you would be able to borrow with a personal loan. It isn’t uncommon at all for people to borrow upwards of $100,000 with auto loans, which isn’t always possible with personal loans.

How Can You Get an Auto Loan?

If you would like to take out an auto loan, you shouldn’t have any issues finding lenders to provide you with one. There are more than 275 million registered vehicles in the U.S. at this time. Because of this, there are auto loan lenders all over the place.

All you’ll need to do to obtain an auto loan is shop around for the right lender to provide you with one. From there, you can get pre-approved for an auto loan before you even begin to look for a new or used car so that you’re aware of what you can spend on one.

After you locate a car you’d like to buy, you can continue to work your way through the car loan approval process until you’re fully approved for a loan. You’ll be able to use an auto loan to pay for a car that you want, and you’ll then have at least three years and sometimes up to seven or even eight years to pay your car off.

One thing you should keep in mind with a car loan, though, is that you may be required to put down a downpayment on it. This isn’t something you’ll ever have to do with a personal loan.

Personal Loan vs Car Loan: Which Should You Choose?

Now that you know what makes a personal loan different from a car loan, you should be able to decide which one would be right for you. More often than not, the personal loan vs car loan debate won’t be much of a debate at all for people.

Unless you’re shopping for a car, you won’t want to take out a car loan. A personal loan is going to be the better option for you when you need to borrow money for just about anything other than a car.

Just figure out how much money you need to borrow, find a personal loan lender, and put in an application. You should be able to get approved for a loan in no time so that you can use it for whatever you want.

Need a Personal Loan? Let Us Help You Secure One

Do you need to borrow money so that you can pay to get your car fixed or take care of a medical bill? A personal loan will be the clear-cut winner in the personal loan vs car loan conversation.

We would love to show you how powerful a personal loan can be by giving you immediate access to some of the best personal loans around. They’ll help you get out of whatever financial quandary you might find yourself in right now.

Check out some of our other blog articles to learn more about the benefits of a personal loan.