The Best Way To Take Out a Personal Loan on a 2025 Car
Written by
John Schmoll
Edited by
Cory Dudak
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Purchasing a car is typically the second-largest purchase Americans will make. Buying a new car, however, exacerbates the situation, as they’re typically more expensive. Therefore, an auto loan seems like the reasonable solution for those not in a position to pay cash for a car.
However, an auto loan isn’t the only solution for people seeking ways to finance the purchase of a car. Here are the best ways to use a personal loan to buy a 2025 car.
Shop Around for the Best Deals
Whenever you’re taking out a loan, it’s advisable to shop around for the best rates and terms. Not every lender is going to offer the same rate, allowing you to reduce the overall indebtedness and monthly payments.
Searching for a personal loan to buy a new car is no different. Speak with local credit unions and banks to learn what kind of rate they can offer. The former may offer a lower rate, but if you’re a customer at a traditional bank, you may qualify for a competitive rate. Don’t overlook online lenders like SoFi or LightStream to see if they can compete, either. Just make sure to keep inquiries within a 14-day window, as that will only reflect as one inquiry on your credit.
The average cost of a new car was $48,799 in May 2025, according to Kelley Blue Book, so finding a lower rate pays.
Don’t Finance Everything
It may be tempting for Americans to take a personal loan to finance everything. After all, it allows buyers to walk into the dealership with a check in hand to pay for the entirety of the purchase.
The reason is multifaceted. Primarily, it results in buyers paying interest on non-essentials like fees and taxes. That can add hundreds, if not thousands, more over the life of the loan. Worse yet, it increases the risk of being upside down on the loan. Instead, try to put cash down to reduce the overall amount you need to borrow.
Confirm Your Credit Score
Any time before you take out a loan, it’s imperative to check your credit. Identify any problems with your credit, and if there are any, resolve them as soon as possible.
Dispute any errors on your credit report and pay down any outstanding debts to boost your score. This may not qualify you to get an auto loan from a dealership, as dealers are tightening loan terms, according to The New York Times, but it may help you earn a better rate on a personal loan to buy a car.
Opt for Fixed Rates
As with any loan, it’s essential to know the terms of a personal loan when using it to purchase a car. Only select a fixed-rate loan so your monthly payments won’t increase. Variable-rate loans may be attractive, but they can be unpredictable.
Moreover, steer clear of loans with exorbitant origination fees or prepayment penalties. Combining this with reducing the overall loan amount, you can keep loan payments in check.
Using a personal loan to buy a 2025 car may seem unconventional. However, in the right situation, it may help you purchase the car you need with few headaches. With tightening loan standards at many dealerships, a personal loan could be a good alternative.
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