Getting a car loan is easy, especially since many dealerships make it very easy to avail of one. Getting out of a car loan – for whatever reason – is more problematic. Car loans are binding, and unless you’re able to pay off the entirety of your loan, there’s no quick or easy way to terminate it. There are a lot of ways to pay back a car loan, though.
What to Consider When Purchasing A Car Through Loans
Consider the following options:
· Return the vehicle – while this is an unsure gamble, you can always try and return the vehicle. If the dealership has a return policy, this could work out well. If they do not however, you will often be given the choice to opt for a cheaper model than the one you intend to return so the dealership can still make a sale.
· Transfer your loan – if you can find someone who will be willing to take on your car loan for you, you can always legally transfer the financial responsibilities to them. This can be anyone – a friend, family member, or volunteer. They will have to meet some criteria set out by the lender, and after all legalities are fulfilled, you’re off the hook.
· Refinance your loan – short of defaulting, you can always try to refinance your car loan. Talk to your lender or car dealer about any possible way to change, extend, or modify the terms of your loan to better suit your current capacity to repay. If your request is approved, choose the best plan that will allow you to maximize your capacity to pay off your loan.
Can We Use Personal Loans To Buy a Car
Yes. You can use a personal loan to fund a car purchase.
Using personal loans to buy a car has its benefits compared to car loans. First of all, unlike a car loan which requires you to use the bought car as collateral in case you default, a personal loan dosn't have any. That's because it is a type of unsecured loan. Another advantage is that you can use a personal loan to buy any vehicle. A car loan limits your purchase to new cars or used cars that are less than 10 years old.
With a personal loan, you'd be able to own the car right away granted that you successfully pay off its full amount. You get to decide how you will use a personal loan. For instance, you can spend it all on the car or divide it across various expenses. There are also many different types of personal loans. You can choose an option that best suits your needs. Finally, a personal loan doesn't require deposit whereas a car loan does.
Does Personal Loans Have Risks?
A personal loan does have its drawbacks. It tends to have higher eligibility requirements, as well as higher interest rates compared to a car loan. Unless you borrow large amounts, you might have to repay a personal loan within 12-24 months. If you have bad credit, a personal loan is going to cost you even more. You also have to pay for car insurance and additional fees out of pocket.
If you want to buy a vehicle, weigh the pros and cons so you can decide whether you're going to use a personal loan.
Yes. You can sell a car even if it's still on loan. Cars with existing loans can be sold to a private party or a dealer. While it is possible, it usually takes time and requires additonal steps. This is because a car with a loan on it won't be under your complete ownership.
The lender whom you owe the car loan to, is in part, also an owner of the vehicle in question. As such, the lender will either be indicated on the title of your car, or will be in possession of the said title.
Lenders do this for two reasons:
1. So you won't be able to sell the vehicle and transfer its title to a new owner
2. It ensures that unless and until you pay the remaining balance of your loan, the lender will partly own the vehicle
If you want to sell a vehicle with an existing loan, you need to pay it off completely to be able to transfer ownership to the buyer. Borrowers who owe the lender more than the sale price of the vehicle will have to pay the difference.
Before you sell a car with a loan on it, you have to find out how much you owe for the car loan, and how you intend on paying it off.
Tip: Buyers might hesitate to buy a car that hasn't been fully paid. It usually helps to tag them along to your lender, and pay the remaining loan balance in front of them.