Auto / vehicle loans

A personal loan can cover a private-party purchase, an older vehicle, or a large repair that a traditional auto loan will not touch.

On an unsecured offer the vehicle is not collateral, so the lender has no automatic right to repossess it over this debt. On a secured offer, the lender does take a lien on a vehicle, and that vehicle is at risk if you stop paying.

Before you borrow for auto / vehicle, run through the points below. They are where most of the avoidable cost sits.

• Secured auto loans usually quote lower APRs precisely because the car backs them
• Check whether the offer in front of you is secured or unsecured before you sign; the APR difference usually reflects that
• Terms on personal loans are typically shorter than on auto finance, so payments can be higher
• Add insurance, tax and registration into the amount you borrow, not just the sticker price

A personal loan is not always the cheapest route. It is worth ruling these out before you commit.

• A dedicated auto loan from a bank or credit union
• Dealer finance, compared on APR and total cost rather than on the monthly payment
• Paying for a repair over time through the garage, where that is offered without interest

A personal loan for auto / vehicle can make sense if the fixed rate is lower than your existing financing and the monthly payment fits your budget.

Remember to compare APRs across lenders, watch for origination fees, and only borrow what you can comfortably repay.

Most personal loans from our lending partners are unsecured and fixed rate. With no collateral involved, the lender prices the loan almost entirely on how likely it believes you are to repay. That judgment is built from your credit history, your income relative to your existing debt, how long you have been employed, and the amount and term you ask for.

Personal loans can also be secured by collateral, such as a motor vehicle. Pledging collateral can support a larger amount or a lower rate, but it puts the vehicle at risk if the loan is not repaid. Secured options vary by lender and may not be available through the lenders currently listed here.

The number that matters is the APR, not the interest rate. APR folds in the interest rate plus any origination fee, so it is the only figure that lets you line two offers up fairly. A loan quoted at a lower interest rate can easily cost more once a 6% origination fee is deducted from the money you actually receive.

• Credit history and score band: the single biggest driver of the rate you are offered
• Debt-to-income ratio: monthly debt payments measured against gross monthly income
• Loan amount and term: longer terms usually carry higher rates
• Income stability: length of employment and whether income is verifiable
• Whether the loan is secured: collateral can lower the rate a lender is willing to offer
• State of residence: not every lender lends in every state