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Can you use a car loan for other things?
I’m very new to the whole car loan process, but I intend to take a loan out soon. If there’s money left after buying the car, is it okay to use a car loan to buy other things?
Chloe Jenkins · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Car loans
are different from most other types of loans—they can only be used to purchase a specific vehicle. So, no, you can’t use a car loan for other things.During the loan application process, the lender will ask for the vehicle identification number, or VIN, of the car you intend to purchase. That specific car will be used as collateral for the loan, all of which is documented within the loan paperwork. That way, if you were to stop paying, the lender can take possession of the vehicle to pay off the remaining loan balance.
All that said, you won’t even be able to use the loan to get a different car—even if it is the same price. The lender would need to redo the paperwork instead.
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