Personal Loan for Car? Discover Freedom Fast (2026)

Buying a car is a significant milestone for many Australians. Whether it's the allure of a sleek new model or the practicality of a reliable used vehicle, the question often arises: Can I use a personal loan to buy a car? Understanding your financing options is crucial in making an informed decision that aligns with your financial goals and lifestyle.

Understanding the Use of Personal Loans for Car Purchases

Personal loans are versatile financial tools that can be used for a variety of purposes, including purchasing a car. Unlike car loans, which are secured against the vehicle, personal loans are typically unsecured, meaning they don't require collateral. This makes them an attractive option for those who may not want to tie the loan to the vehicle itself. However, personal loans often come with higher interest rates compared to secured loans, reflecting the increased risk to the lender.

Current Market Information and Options

As of 2026, the Australian financial market offers a range of personal loan options with varying interest rates and terms. Interest rates for personal loans can range from 6.49% to 12%, depending on the lender, your credit score, and the loan amount. It's important to compare different lenders to find the best rate and terms that suit your needs.

At Esteb and Co, we have access to a panel of 83+ lenders, offering a wide array of personal loan products. This diversity allows us to match borrowers with lenders that best fit their individual circumstances.

Lender	Interest Rate	Loan Term
Lender A	6.49% - 8.75%	1 to 7 years
Lender B	7.00% - 9.50%	1 to 5 years
Lender C	8.00% - 12.00%	2 to 6 years

Steps to Using a Personal Loan to Buy a Car

Here is a step-by-step guide to using a personal loan for your car purchase:

1. Assess Your Financial Situation: Determine how much you can afford to borrow and repay. Consider your income, expenses, and any existing debts.
2. Check Your Credit Score: Your credit score will influence the interest rates offered to you. A higher score typically results in better rates.
3. Compare Lenders: Use resources like Esteb and Co to compare rates and terms from multiple lenders.
4. Apply for Pre-Approval: Getting pre-approved can give you a clearer idea of your borrowing capacity and the terms you might receive.
5. Choose Your Car: With a pre-approval in hand, select the car that fits your budget and lifestyle.
6. Finalise the Loan: Submit your loan application with the chosen lender and provide any required documentation.
7. Purchase the Car: Once the loan is approved, use the funds to purchase your vehicle.

Expert Tips and Considerations

Here are some expert tips to keep in mind when using a personal loan for a car purchase:

• Consider Total Loan Costs: Don't focus solely on the interest rate. Consider fees, charges, and the total loan cost over its term.
• Be Mindful of Loan Terms: Longer loan terms may mean lower monthly repayments but could result in higher total interest paid.
• Beware of Over-Borrowing: Only borrow what you need. Over-borrowing can lead to financial strain down the line.
• Review Flexibility: Check if the loan offers features like extra repayments or redraw facilities, which can help you manage the loan more effectively.

Frequently Asked Questions

1. Is it cheaper to use a personal loan or a car loan?

Car loans typically offer lower interest rates because they are secured against the vehicle. However, personal loans offer more flexibility and can be advantageous if you don't want the loan tied to the car.

2. Can I use a personal loan for a used car?

Yes, personal loans can be used to purchase both new and used cars, offering flexibility in your choice of vehicle.

3. What are the eligibility criteria for a personal loan?

Eligibility criteria may include a stable income, a good credit history, and being over 18 years of age. Specific requirements vary by lender.

4. How long does it take to get approved for a personal loan?

Approval times vary, but many lenders offer quick approvals, sometimes within 24 hours, especially if you have all necessary documentation ready.

5. Will applying for a personal loan affect my credit score?

Yes, each application can result in a credit inquiry, which may slightly impact your credit score. However, responsible borrowing and repayment can improve your score over time.

Understanding the nuances of using a personal loan for buying a car can empower you to make the best financial decision. With Esteb and Co's access to over 83 lenders, you have the advantage of finding a loan tailored to your needs.