3 Reasons Car Finance Is Better Than A Loan 

You probably already know that in order to get a good car – a more modern, more reliable one – you’ll need to take out some kind of financial borrowing. Unless you have a few thousand spare to pay for the car outright, this is the best option for you. Otherwise, you’ll have to buy a much cheaper car that could keep breaking down and causing you more trouble. 

However, even though this decision is a potentially easy one, there are still more choices to be made. After all, there are both car financing options and standard loans. Which one is better? The reality is that when it comes to buying a car, car finance is usually the way to go. Read on to find out more about why this is the case.

Easier To Get Vehicle Finance 

You might not think there is much difference between the two types of “borrowing”, but there are some major differences that could be important to know if you need to choose between both options. The main one is that with auto financing, which you can find through sites like, the borrowing is secured on the car itself. If you become unable to keep up with the payments, the vehicle might be taken away to repay the debt.

With a personal loan, on the other hand, it will usually be secured on your home or another valuable asset – this makes it much riskier in the event that you can no longer undertake your car payments. If the loan is secured solely on the car, it is easier (although there will still be some restrictions) to get the money. In many cases, it will be paid directly to the dealer, meaning that the lender can be sure the money is used for its intended purpose, cutting the risk even more. 

There are also unsecured loans available, which might sound great but are much more expensive, and it might be harder to get the loan in the first place

Car Finance Is Cheaper 

Compared to a personal loan, car finance tends to be cheaper. This is not always the case and will depend a lot on your credit score and creditworthiness, but as a general rule, car finance is a less expensive option. As mentioned above, this will be due to the borrowing being secured on the car itself, meaning there is less risk to the lender. However, it is still essential to make sure you can afford the repayments. 

Make sure that, should your situation change – a new job, not having a job, extra expenses in the home, and so on – that you’ll still be able to cover the costs. If you can’t, your credit might be affected, and you may lose your car as well, which could make things difficult.

Better For Bad Credit 

If you have bad credit, no matter what the reason for that credit might be, you may find it hard to get a personal loan. Perhaps you’ve borrowed too much in the past, or you have defaulted too many times. Maybe you don’t have any credit at all – this can be just as detrimental to your credit score. 

Personal loan lenders are wary about lending, particularly when the loan is an unsecured one. Auto finance lenders are still cautious but are less strict; this is because the money is to be used for one thing and secured on that asset – the vehicle, which holds value in itself.

If you have bad credit, not only could an auto finance loan help you buy a car, but as long as you pay it back on time, it can even help to build your credit

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