If you’re in the market for a new car, you are likely to have come across two main types of loans that you can use to fund your purchase. A personal loan, and a car loan.
At Handy Finance, we can offer both personal loans and car loans for customers seeking to buy a new or secondhand vehicle. Both types of loans may have their advantages. If you’re having trouble working out which loan is the right option for you, read on to learn more about personal loans and car loans from Handy Finance.
What is a car loan?
A car loan is a loan that can be used to purchase a new or used vehicle. It’s an option to buy the car you want, without having to pay for the vehicle upfront. Using a loan could allow you to spread the cost into more manageable weekly, fortnight or monthly payments over several years.
At Handy Finance, we offer secured car loans between $2,001 and $100,000. You can apply for a loan term of between one and seven years. If approved, there are no restrictions on the car you can buy with your loan. It could be brand new or secondhand, depending on your chosen budget and can be electric, hybrid or a traditional model. As the loan is secured, the car you’re buying may be used as collateral. This gives us as the lender some security against the loan – in turn, you could benefit from lower interest rates.
Lastly, all Handy Finance Car Loans have fixed interest rates. This means that once you’ve been approved your repayment sum won’t change. You’ll be able to budget confidently, knowing exactly how much money will come out of your account each month, fortnight or week.
Car loans can be a fast, fair and flexible way to purchase the right vehicle for you.
Car loans:
- Are secured, and therefore likely to have a lower fixed interest rate
- Have been created specifically for those wanting to buy a car
- Can be used to purchase new or used vehicles
- Must only be used to purchase a vehicle
What is a personal loan?
A personal loan can be your go-to solution for all sorts of financial needs. It is a general loan that can be spent on most big purchases that you choose. At Handy Finance, we offer unsecured and secured personal loans. Secured personal loans operate the same way secured car loans do – something of value (usually a car) is used as security on the loan, creating a potentially lower level of risk for lenders.
Unsecured personal loans don’t require security against the loan. As these can be a higher risk for lenders, you may find that the interest rate you’re offered will be slightly higher than that of a secured personal loan.
Unlike car loans, which must be put towards the purchase of a car, personal loans can be used for a variety of reasons.
Personal loans:
- Can be secured or unsecured
- Have a fixed interest rate
- Can be used to fund different types of large purchase: you can use the loan to purchase a new car and pay off costs related to home renovations, for example.
Personal loan vs car loan: choosing the right one for you
When you’re weighing up personal loans and car loans from different lenders, there are several factors to consider before making a final choice:
- Are secured or unsecured options available for both loans?
- Are there any age restrictions on the car loan?
- Are the loan amount and loan term choices the same?
- Are there other personal costs that you need to raise funds for?
- Are there any fees associated with the personal or car loan?
- Are early repayment options available?
Car loans and personal loans from Handy Finance are quite similar when you compare the above factors. In fact, a car loan is a type of personal loan that is specifically designed for purchasing a car.
Both loans are subject to the same eligibility criteria. You can apply for personal loans between $2,001 and $75,000, or up to $100,000 for home improvement projects or car loans, with repayment terms of one to seven years and options for weekly, fortnightly, or monthly instalments.
Our personal loans and car loans both have no early exit or early repayment fees, so both have the option of early repayment without any financial penalty.
The biggest difference between a car loan and a personal loan is the core purpose of the loan. A car loan has been created to fund the purchase of a new or used car. A personal loan can be used to pay for a number of different things. What kind of car are you planning to buy? Will it be brand new and road-ready? A secured car loan might be a good option.
Or are you planning on purchasing something secondhand, or a little older, which may be in need of some repairs? Are you planning on making significant modifications to a car to enhance accessibility features? Depending on your situation the best choice may be an unsecured personal loan, where you could use the funds to purchase a car and any leftover funds to cover the cost of repairs or upgrades.
Find a range of personal loan and car loan options with Handy Finance
Ultimately, whether you choose to apply for a car loan or a personal loan will largely depend on what you’re looking to purchase. And when you choose Handy Finance as your lender, you could benefit from a range of competitive loan terms and interest rates.
To estimate your repayments, you can check out the Handy Finance personal loan calculator or the Handy Finance car loan calculator.
Are you looking for more information on buying a new car? Explore our how-to guide on getting a car loan, learn more about car stamp duty or luxury car tax and read about the costs and pros and cons of leasing a car on our blog today.
Approvals are subject to Handy Finance’s credit criteria and responsible lending requirements. Fees, charges, terms and conditions apply. Finance provided to approved applicants by OurMoneyMarket Lending Pty Ltd ABN 64 605 231 669, trading as ‘Handy Finance’ holds Australian Credit Licence number 488228 and is a member of the Australian Financial Complaints Authority (AFCA). The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, we recommend that you consider whether it is appropriate for your circumstances. We recommend you obtain independent advice before acting on any information in this article.
