In many cases, the interest rate you can get on an auto loan will be lower than what you can get on a personal loan.
That’s because the auto loan is a secured loan (the vehicle is collateral) whereas the personal loan is unsecured.
However, dealership financing can be the best deal in some specific situations.
Is car finance better than a loan?
Car loans, on the other hand, are secured loans that use your car as collateral. Lenders give you a lump sum payment to purchase your car, and offer more competitive rates than you would with an unsecured loan. However, if you default on your loan you could lose your vehicle.
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