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An unsecured car loan works like a personal loan: You don’t have to put up any collateral and therefore can borrow more than the value of your vehicle. You can borrow more to cover insurance, additional costs or anything you need.
However, unsecured loans You may also be subject to stricter eligibility criteria, like good credit, but your car likely won’t need to meet any criteria.
Many auto lenders provide secured car loans only. You may want to click over to the “Personal loans” tab for unsecured loan options that don’t require collateral.
Most personal loan lenders don’t require collateral. Some even offer specialized loans for car purchases.
The most important part of picking a lender is comparing the loans you’re offered. Here are some quick tips to help you focus your decision:
If you borrow more than the cost of your car, be careful not to apply for more than you can afford. Work out a budget to ensure you will be able to afford your repayments. These loans tend to come with higher rates than secured car loans, so take this into account when submitting an application.
When you have an unsecured car loan, you can use your funds to purchase more than just the car. Dealer extras can be a good deal if you know what you’re getting and what you want to avoid. However, it’s often not worth it since you can often get the same service elsewhere for cheaper — if it’s even necessary at all.
Here is a list of common dealer extras and when you might not want to go for them.
An unsecured car loan can be a quick way to finance your next vehicle, but it comes with its own risks that you’ll need to understand before you borrow. Compare your rates and read up on personal loans so you can make the most informed decision.
If you’re interested in a traditional auto loan secured by your vehicle purchase, you can visit our page on secured car loans compare lenders.
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