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Ideal for: People who want to own their car at the beginning of the finance agreement and do not have a deposit to put towards their purchase.
You organise the money for the car by taking out a personal loan with a bank or other financial institution. You then choose your car at the dealership and pay the dealer with the money you have borrowed.
As you are borrowing a lump sum in order to buy the car outright, you will immediately become the legal owner once you have paid the dealer. However, personal loans are generally unsecured agreements. This means that you cannot hand the car back in the event of financial difficulty, although you may decide to sell it in order to repay any money you owe to your bank.
Under a personal loan agreement you immediately become the owner of the car, but will need to continue repaying the bank or financial institution until the loan amount is paid off in full. At the end of the agreement, all of the car’s current market value could be recouped if you decided to sell it or traded it in as a deposit against your next car.