At this point, we are going to talk about personal loan for the purchase of vehicles, without guarantee.
This type of personal loan can be used for many purposes, including buying a new vehicle or a used vehicle.
Its main characteristic is that when taking out the personal loan, you will not need to provide any type of guarantee to your creditor, that is, the bank or financial institution, will not have the right to recover your vehicle, in the event of default.
A consequence of this facility is the considerable increase in interest rates, on top of the installments.
Who can apply for a Personal Loan to purchase vehicles?
There are not many requirements for this type of credit. Any natural person, carrying identity documents or bank accounts, will be able to apply for a personal loan.
What amount can I borrow on an unsecured personal loan?
There is no way to answer precisely about the amount that will be released, after all, each situation will be treated differently, according to the profile of each applicant.
In case a particular lender gives a person the unsecured personal loan of $15,000, it does not mean that the same lender will give you an unsecured personal loan of the same amount of $15,000. Depending on your profile, you may only be approved for $5,000.
Another hypothesis is: If Lender X is willing to release an unsecured personal loan in the amount of $20,000, it does not mean that Lender Y will also lend $20,000 – maybe Lender Y will only release $5,000 or maybe it will not release at all. It all boils down to the eligibility criteria set by the financial institutions.
It is worth mentioning that your credit score will be a determining factor when applying for a loan. Good credit scores generally make it easier to approve higher amounts and lower rates than borrowers with below-average credit scores.
What you need to know before buying a vehicle with a personal loan
To find the best unsecured personal loan option, you should look at the following factors:
- Fees – The fees included in your loan can be many. These include establishment fees, ongoing fees, loan service fees, fixed and variable fees, comparison fees, among others.
- Payment term for the loan – Lenders usually have a minimum and maximum term already determined for this type of credit, with a minimum of 1 year and a maximum of up to 7 years. Use this information to calculate the total amount of your loan, adding up fixed amounts and interest rates.
- Deposit – It is worth considering a down payment when applying for a personal loan. Bear in mind that this will considerably reduce the final amount of your personal loan.
- Minimum and maximum amounts offered by banks and financial institutions, in the personal loan modality – In the personal loan, the minimum amount borrowed is 5,000 and the maximum is validated for each applicant, depending on some relevant factors, normally not exceeding 50,000 in the modality “no Warranty”.
Pros of unsecured personal loan:
- Flexibility of use – When applying for a personal loan, you can use the amount for any purpose you want.
- No need for collateral – In this mode, there will be no need to provide any asset or property as collateral to receive the loan. Even using the loan amount to buy an asset, you will not run the risk of losing it due to default.
- Credit history – For those who do not have much financial activity in their names, personal loans can be a good option to leverage their purchasing power and access to greater values.
Cons of unsecured personal loan:
- High costs – We know that any type of loan will cost a higher amount than borrowed, however, the unsecured personal loan will provide a higher cost than normal.
- Higher interest rates – As this is an unsecured credit for the creditor, an alternative used is the increase in rates so that the risk of loss becomes lower.