Car loan or personal loan for your next car?

July 18 2022 -

When you buy a vehicle, you have several options available to you to finance your purchase. You can get a traditional car loan from your dealer, but you can also get a personal loan from a financial institution. Some buyers also decide to finance their loan with a line of credit. If you're wondering which option is best for you, this article should be able to help.

The car loan, always the best solution

Before we get into why, let's first mention that in general, a car loan is the best option for buying a vehicle. It is the most suitable and flexible option, and it is certainly the one that offers the most advantages if our credit is not perfect.

The advantages of the traditional car loan

The car loan offers several advantages:

- Lower interest rate

- Possibility of shopping around for a rate

- Flexibility in the frequency of payments

- Second and third chance at credit

- Possibility of refinancing

Despite the increase in interest rates, a car loan still offers the best rate, especially compared to a personal loan. While a personal loan can have an interest rate of 8% or more, a car loan is often subject to an interest rate of less than 5%. Historically there has always been a difference of about 5% between the rate of a personal loan and that of a car loan and this is still true today, even with the rise in rates.

On the other hand, when you deal with our experts here at Steele Valley Chevrolet, it's like dealing with dozens of institutions at once. Our specialists work with several banking institutions which means they are able to compare the different options available so you can get the best rate and the best loan. You could do this by shopping around for a personal loan, but you would have to contact all the institutions which is obviously much more time consuming.

Also, when you have a car loan, it's much easier to refinance down the road, if interest rates ever go down. Also, if your credit improves over time, you may be able to get a loan with better terms, but only with a car loan.

In closing, it is important to note that if your credit is not perfect, you may have difficulty obtaining a personal loan. With a car loan, it is possible to not only get a loan, but also to get a more flexible loan with better terms.

Come learn more today about our different auto financing solutions, including our second chance and third chance credit loans.

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