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Personal Loan VS Auto Loan question please

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Personal Loan VS Auto Loan question please

This is admittedly a lazy question, as I could do the math here.... but thought I'd ask any quick insight for now:

 

$10,000 car for sale (not planning to put money down)

Option 1- Auto loan at 5% interest and procure full coverage auto insurance for 2 years

Option 2- Personal loan at 10% interest and procure state minimum auto insurance for 2 years

 

Which is cheaper full 2 year term grand total ya think?? (Alabama, good credit, good driving record)

 

Thanks 

Message 1 of 3
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Established Contributor

Re: Personal Loan VS Auto Loan question please

On the personal loan, you’ll pay $1075 in interest vs $530 in interest for the auto loan. I don’t know what you’ll pay in car insurance down in Alabama, so you’ll have to calculate the difference between full coverage and liability only to see if it makes up for the difference in interest rates. In my state, it’s not a huge difference between full coverage and minimum so the auto loan would probably make more sense.


September 2019:

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Message 2 of 3
Established Contributor

Re: Personal Loan VS Auto Loan question please

Also, if something happens to the car, at least insurance will take care of it. You’ll be on the hook for the loan no matter what, so I’d rather have the lower interest and security of insurance covering most (if not all) of the cost.


September 2019:

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Message 3 of 3
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