A Personal Loan is a personal finance product where the financier lends the customer funds which can be used to purchase a car, but does not hold any security over the loan. Personal Loan can also be known as an Unsecured Car Loan.
How does a Personal Loan work?
Under a Personal Loan the financier advances funds to the customer, which the customer can use to purchase a car. The customer takes ownership of the vehicle at the time of purchase, and must repay the loan to the financier over the agreed terms. The financier does not hold the vehicle as security for the loan.
Benefits of a Personal Loan
- Flexible contract terms ranging from 12 to 120 months (one to ten years)
- Fixed or variable interest rates
- Deposit (either cash or trade-in) may be used
- A tax deduction is available when the vehicle is used for business purposes
- Less stringent approval guidelines
- The loan is not secured against your vehicle
Who does a Personal Loan suit?
A Personal Loan is suitable for individuals who wish to purchase a car that is outside of normal lending guidelines (e.g. older model and low value vehicles) or who do not wish to have a loan secured against their vehicle.
Tax implications of a Personal Loan
As a Car Loan is a personal finance product, only normal tax deductions for depreciation and running costs can be claimed (on a pro-rata basis according to the percentage of business use).
If you are considering a Personal Loan you may also want to take a look at a Car Loan or Novated Lease (Salary Packaging). To find out what is best for you, try our easy "Which Finance Is Right For You?"