Thanks to financing options like car loans, buying a new car is no longer a distant, unaffordable dream for a majority of people. However, most people aren’t aware that there is another financing option available: personal loans.
Personal loans can be used for any kind of purchase, and, provided your credit score is high enough, can come with interest rates under 6%. You can also use tools like the Alex Bank – car loan repayment calculator to understand how much you will have to pay back every week, fortnight, or month to repay your loan in full.
Can You Take a Personal Loan for a Car?
The simplest answer to the question is yes. You can take a personal loan to pay for any big purchase, be it a car, wedding, or even your dream vacation. You can also leverage it for debt consolidation. If you have multiple loans with varying repayment terms, you can pay them off with one loan, and just pay the installments for that one loan.
Australians have taken out personal loans amounting to $145.5 billion as of 2020. According to a survey, 88% of personal loans taken are for planned purchases like a car, holidays, weddings, or home improvement projects.
How to Choose a Personal Loan to Buy a New Car?
When browsing through various lenders offering personal loans, here are some factors that you should pay attention to.
Financial Condition
First, you must know where you stand financially. Do you have a stable source of income? How much do you earn? How much do you spend and save?
When taking a loan, you need to estimate beforehand if you will be able to repay the loan with your current income.
For example, when you use the Alex Bank – car loan repayment calculator, you can input the loan amount, term, and payment frequency to get an overview of the total amount you might have to repay. The tool helps you decide if you can take a loan in the first place.
Prerequisite
Most lenders have requirements that you need to fulfill before you can even apply for a personal loan. Some of these standard requirements are that you should be an Australian citizen or hold a PR. You should also be over 18 years old and have a regular source of income.
Interest Rate
When you borrow money, you need to pay the lender an interest rate on the loan amount. For example, if you borrow $10,000 for a period of 36 months at an interest rate of 12.99%, you have to pay the lender $12,128.09 over three years.
If you want to get a fair interest rate, take a look at your credit score. The score tells the lender how reliable a borrower you might be. The higher the score, the higher are the chances of you getting a good deal on a personal loan.
Fees
Lenders may charge monthly, ongoing, recurring, and administrative fees. Choose to get a personal loan from the lender that does away with such fees. They should provide you with a transparent structure of what type and amount of fees are going into repayment.
Loan Repayment Terms
What loan term suits your requirement the best? For example, can you repay the loan in 12 months, or do you need 60 months to do so?
Some lenders offer you the flexibility of repaying loans in 6 months. The interest rate might be higher in such a case, but you will repay less compared to a longer loan term.
Flexibility
With customer needs taking center stage, make the most of the flexible personal loans offered in the market. You can repay loans on a weekly, fortnightly, or monthly basis. In addition, you get to choose the loan term. Some lenders also allow you the freedom to make early payoffs without penalizing you with an additional fee.
Take a look at the Alex Bank – car loan repayment calculator and structure your personal loan as per your requirement.
How to Apply for a Personal Loan?
You can visit a bank branch and fill in physical forms and submit your loan application. Or you can apply digitally for the loan right from the comfort of your home. You can use the loan calculator, fill in your requirements, upload documents and submit the application online – a completely paperless process.
When buying a car, first look at your finances and determine if you can afford a personal loan. Then, compare features like interest rate, early payout fees, and repayment flexibility when looking at personal loans to identify the best loan and repayment plan for your needs.
