Dear Personal Loan Adviser,
I’m looking to finance a used car and want to know if it makes sense to do it with a personal loan. What do you think?
— Jim Jalopy
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Dear Jim,
There are 3 main reasons why a personal loan may make sense when buying a used car. The 1st is that you’re looking at a car of a certain age, and you can’t find conventional used car financing for the vehicle.
RATE SEARCH: Find a great rate on a personal loan for a used car.
The 2nd reason is that your credit isn’t quite good enough to qualify for a conventional used car loan. You want to avoid paying an exorbitant rate on the secured loan.
That points to the 3rd and probably most important reason.
Use a personal loan to finance a used car when the interest rate on the loan is lower than what you can get with conventional, secured, used car financing.
An added benefit is that the lender can’t repossess the car, should you fall behind on your car payments, although the missed payments will show up on your credit history and bring down your credit score.
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