What is a car loan?
A car loan is a specific type of personal loan that you can use to buy a new or used motor vehicle when your savings won’t cover the total cost upfront. When you take out a car loan, you will need to make regular repayments over a fixed term towards the lump sum you borrowed (the principal), as well as interest accrued. The interest rate will apply on the loan amount from the time you take out the loan.
Car loans typically range from $5,000 to $100,000 and often have loan terms from one to ten years. Interest rates generally vary between 2.99% and 10% for secured car loans, and up to 15% for unsecured loans. The interest rate on a car loan can often be lower than on a personal loan as the loan is often secured by the car you are purchasing.
It’s generally a good idea to spend some time comparing your options when it comes to choosing a loan, as the interest rate isn’t the only thing you should consider.
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