On the other hand, a traditional car loan works within the limits of what its name implies. It strictly applies to a car purchase. The notable contrast here is that while a personal loan is multi-purpose, a car loan is not.
Can I Take out a Loan to Buy a Car?
Let’s answer this question: can I take out a loan to buy a car? There are lots of loan types that are made for a given example of purchase. For instance, mortgages are for houses; auto loans are for vehicles, to mention a few. However, the proceeds from a personal loan can be used to do anything you like. You can use it to go on vacation, refinance a debt. You can use it to buy a car as well. This means taking out a loan to buy a car is possible with the aid of a personal loan. You don’t need to wait and find the vehicle you would like to buy before applying for a personal loan. If you apply for a personal loan and it is granted to you, the funds would be disbursed directly into a checking or savings account by a deposit.
Nevertheless, the fact that taking out a loan to buy a car is possible doesn’t mean you necessarily should obtain it. In answering the question “can I get a personal loan for a car?”, especially if you are in the state of Nevada, there are lots of considerations for you to make. It is not something you can jump into.
There are a few circumstances where using the best personal online loan in Vegas to get a car is better than using a traditional auto loan. This means there are many other situations and reasons where and why opting for a conventional auto loan will be better than using a personal loan to finance a car. All these different sides to the subject will be considered below.
When Should I Buy a Car with a Personal Loan?
When you want to purchase from a private party
One of the few favorable circumstances where taking out a loan to buy a car would make a lot of sense is where the person selling the vehicle to you is a private party. Even though most banks offer loans to buy cars from people, not all sellers are patient enough to jump through hoops. This means using a loan to finance a vehicle requires you to find a seller that is patient enough to do that.
The thing is that most sellers that list their vehicles on places like eBay, Bring-A-Trailer or Craigslist would rather want to be paid in cash or cashier’s check instead of waiting several days for the buyer to get approved to purchase their particular car. It will make a lot of common sense to use a personal loan to finance the purchase in this kind of situation. You can even obtain a traditional car loan against the car to refinance the personal loan balance after you have taken possession of the car.
When buying a project vehicle
Another situation where taking out a personal loan to fund a car purchase would go down well is when the car you want to buy is a project. The bitter truth is that the vast majority of banks out there are not interested in granting auto loans for vehicles that are not in a roadworthy condition. As such, it will be extremely hard, if not impossible, to finance damaged cars, older cars, and also cars with salvage or rebuilt titles with a traditional vehicle loan.
Therefore, if the type of car you want to get is not in a good working condition, such as for instance, one that looks like a pile of parts instead of a vehicle that can be operated, you will be better off with using a personal loan to finance the purchase.
When you are avoiding full coverage insurance
When you are obtaining a traditional vehicle loan, you will have to carry what is known as full coverage car insurance for the car in question. This full-coverage includes things like collision and comprehensive coverage, which helps to provide financial protection against risks such as theft, damage, and a host of others.
However, you can avoid full coverage auto insurance by using a personal loan to finance a vehicle. No doubt, this is a smart move as it will save you money at the cost of taking risks when you incur weather damage, get involved in an accident, or your vehicle gets stolen.
Why You May Not Want to Get a Small Loan for a Car in Nevada
In answering the question, “can I take out a loan to buy a car”, we have highlighted above the situations where the answer is a solid yes. However, it is not everyone that is taking out a loan to buy a car that is making a reasonable decision. There are some situations where you will be better off with a traditional auto loan rather than a personal loan in financing the purchase of a car.
Here, we are going to highlight and briefly discuss some of these reasons as much as we can.
Personal loans can come with high-interest rates
One of the problems you will face if you want to use a personal loan to fund a car is the high-interest rate it tends to carry. This is different from than a traditional car loan that is ultimately backed by collateral. A personal loan does not come with any collateral to support it. Due to this, lenders usually charge lower interest rates on traditional car loans than personal loans. That is, the interest rates of personal loans are generally higher.
Personal loans may have more significant limits
Another reason why you might not want to get a car using a personal loan is that personal loans have larger limits due to lack of collateral backing. It is typically easier to borrow more substantial sums of money when a loan is backed by collateral than when the opposite is the case.
For instance, a borrower may easily qualify for a $50,000 car loan. In contrast, he may only be eligible for a $25,000 personal loan. So, with a traditional auto loan, you can get a more substantial loan, unlike the personal loan where the limits are more prominent.
It requires less time to repay
If you are in Nevada and you don’t make enough to cover your loan within a short period of time, it is not advisable for you to try financing a car with a personal loan. The thing is that if you get a typical personal loan, you will have to repay it in just three years. Well, some lenders can extend it to five years, but that might still not be enough for some people to complete the repayment.
On the other end, an automatic car loan can come with repayment duration of seven years. It can even be stretched longer in some instances; thus, providing you enough time to repay the loan. This is not a thumb rule that says that you should necessarily outstretch a loan for as long as you can without any cogent reason. However, the crux of the matter here is that due to circumstances beyond their control, some borrowers might just need more time for them to repay a loan financing a car purchase fully. In that kind of situation where a longer loan term is a necessity, a personal loan is not the best choice for you. No doubt, you will be better off with a traditional auto loan.
In conclusion, the article has provided an excellent answer to “can I get a personal loan for a car?” In a few situations, it is the best possible option for you if you want to finance a car purchase. It offers a practical solution to some of the deadlocks you might face if you’re going to buy a car with a traditional car loan. However, it remains a less popular option for financing a vehicle when you consider a list of things like interest rates, repayment terms, and many more.
Your particular circumstances will determine whether you are to finance that car you want to get with a personal loan or not. Therefore, consider your details before deciding on taking a personal loan in Nevada.