A Loan For The Purchase. What Do You Need To Know?

Buying a used car is an option that is decided by a lot of people – both entrepreneurs and private investors. Unfortunately, very often, this kind of investment requires finding an attractive form of financing. What opportunities does the credit market offer us in this area? Which solution is the best?

A loan for the purchase of a used car – opportunities


There are two basic forms of financing the purchase of a used car, and they include a cash loan and a car loan. Both of them have their advantages and disadvantages, but individual products offered by lenders allow you to find the most convenient alternative to finance our investment.

loan – the pros and cons of such a solution

Car loan - the pros and cons of such a solution

If after a long search we find a dream car, but unfortunately the state of savings does not allow for its purchase from its own means, a car loan becomes a very attractive alternative. Like every credit option, it has its advantages and disadvantages.

The positive aspects of this type of loan include:

  • low interest rate,
  • relatively long financing period, which can reach even 10 years,
  • the option of choosing a convenient repayment option suited to the borrower’s ability,
  • very extensive selection of loans – some of the car brands have their own banks offering financing on very attractive terms.

The disadvantages of a car loan include:

  • a relatively high amount of liability,
  • quite a long period of completing the formalities,
  • requirement of own contribution,
  • the necessity of applying additional security on the subject of the loan, such as a registered pledge, transfer of ownership or assignment from the AC policy,
  • the bank is listed as a co-owner, and thus it is impossible to sell a car without its knowledge and consent,
  • necessity to purchase AC insurance.

Cash loan – the pros and cons of such a solution

 Cash loan - the pros and cons of such a solution

A loan to buy a used car in cash is an option that gives you more freedom compared to a car loan. The cash raised in this alternative can be used to buy a car, but at the last minute we can also devote it to something completely different.

The advantages of a cash loan include:

  • quick acquisition of funds for the purchase of a car,
  • no need to apply collateral on the subject of financing,
  • minimum formalities – it is enough to obtain a personal ID and a certificate of earnings (sometimes only a statement is required),
  • after the purchase of the car, the borrower is its sole owner,
  • the money obtained under the loan can be used to purchase a car, but also for other purposes, eg holidays or renovation,
  • lack of own contribution.

Among the disadvantages of this type of crediting, one should first of all mention a higher interest rate than the one offered in a car loan.


A loan or cash loan – which one to choose?


 A car loan or cash loan - which one to choose?

The situation and needs decide first of all which alternative is better for us. In terms of financing, a car loan is much more profitable, the repayment of which can be matched to the possibilities. However, it requires an own deposit and many additional collateral, hence it may be problematic for some investors . On the other hand, cash loan is an excellent option for people who want to settle formalities quickly and efficiently, without explaining to what purpose money will be spent, but as a result it is more expensive solution.



The loan for the purchase of a used car is an extremely interesting option for anyone who wants to buy a dream vehicle. The solutions available on the market are quite diverse, so every investor can find one that will be more optimal in his individual situation. (Q)


Leave a Reply

Your email address will not be published. Required fields are marked *