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Posted in Auto Loans
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nycdude27

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can one get an auto loan and not actually use it for the same but for other purposes?
Can an auto loan be sanctioned before a vehicle is purchased? And what happens if a vehicle is never purchased, then is it that one cannot get it?

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It depends.

If the loan is secured (as most auto loans are), the answer is "no."  Reason being, the title of the car is encumbered and sent to the bank who is financing your loan.  They keep it as collateral in the event you fail to pay your loan  Proceeds for the car (or bank check) is usually made out to whomever is selling the car and not to you.  You receive a clear title back once you pay the loan off.

If the loan is unsecured, then the answer is "yes".  Unsecured means there is no collateral.  You get the money free and clear to do what you want with.  If you use it to purchase a car, then the title is signed right over to you.  It does not go to the bank.  

Typically, unsecured loans are harder to get as you need to have great credit.  Interest rates on unsecured loans are usually higher too in order to offset the higher risk of defaults.

Standard car loans are much easier to get, even if you have credit problems.  Since they are secured, the interest rates are much lower. 

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