Planning on buying a new car straight from the dealership? A new car loan can help you access the funds you need to make the purchase and get on the road.

Buying a new car involves a significant amount of funds that can take time to save up for. A new car loan allows individuals to borrow the necessary funds to finance the purchase of the car upfront and start driving it. Borrowers will need to make regular repayments over the loan term to pay back the borrowed amount, along with the interest costs.

A new car loan will typically come in two forms: secured and unsecured.

  • Secured Car Loans: Require you to pledge your purchased car as collateral. This means the lender has the right to take possession of the car if you default on the loan. In return, you might benefit from lower interest rates.
  • Unsecured Car Loans: Don't require collateral but often come with higher interest rates. Lenders assess your creditworthiness to determine your eligibility and interest rate. 

When choosing between these options, consider your financial situation and risk tolerance. If you have a strong credit history, an unsecured loan might be a suitable choice. However, if you're concerned about potential default or want to lower your interest rate, a secured loan could be a better option - it’s important to talk to a broker about your options.

What Is Required To Apply For a New Car Loan?

To apply for a new car loan, borrowers will need to provide the following documents: 

  • Identification – A driver's license, passport, or birth certificate as proof of the legal identity.
  • Income statements – Pay slips, tax returns, or bank statements that showcase a steady stream of income.
  • Residential documents – Utility bills, rental agreements, or other documents with an indicated address that is registered to your name.
  • Vehicle information – Details about the car you want to purchase, such as the make, model, year, and price.
  • Financial information – Lenders will also ask for details such as credit reports, existing debts, and assets to assess your ability to repay the loan.

In most cases, borrowers will need to provide a down payment on the car as part of the new car loan’s terms.

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