When it comes to purchasing a car, you basically have two main options. You can save up your money, spend years paying for the vehicle in cash, and keep driving it until something goes wrong. Or you could get a car loan. Car loans are real financial commitments that are paid off over time with consistent payments. Depending on the type of loan you get, your monthly payment can be anywhere from $100 to over $500.
The latter option—a car loan—has its pros and cons, but it’s usually the best choice for most people who are looking for a new or used car. While there are plenty of reasons why you should avoid getting a loan if at all possible, there are numerous benefits associated with getting one. This article outlines three of the major benefits of obtaining a car loan so you can more easily decide whether it’s the right financial move for you.
Car Loans Offer Flexibility
One benefit is that car loans offer flexibility. Because loans are paid off over time, your monthly payment tends to stay the same. This means you can budget easier and you won’t have to worry about what your monthly payment will be in the future if, for example, you lose your job and get a lower-paying one. You’ll simply pay the same amount that you had been paying all along, making it much more convenient than having to constantly reevaluate how much you can afford to pay for your car.
Most people don’t plan to lose their job, but it happens every day. If you’ve ever had to deal with an unexpected financial burden like this, having one consistent payment is an invaluable benefit. Just make sure that if you do get a loan, you set up each monthly payment for auto-debit. This ensures that you never miss a payment because your money is automatically deducted from your bank account each month. If you have the choice, it’s best to pay off your loan in less than three years. That way you can avoid having monthly payments for much longer than necessary.
Borrow 100% of the Purchase Price
The second major benefit is that you can borrow 100% of the purchase price when you get a car loan. If you’re looking to buy a new vehicle, this means you won’t have to pay out of pocket for it. You can simply pay for it in monthly instalments with new car finance; and if you don’t like the car in a few years and want to get rid of it, you can sell the vehicle and pay off your loan.
Of course, not everyone wants to buy a new car; there are many benefits associated with getting a quality used car instead. Fortunately, if you want to purchase an older pre-owned vehicle, you can still borrow 100% of its value by getting a loan. Some banks may require you to secure your loan with a vehicle appraisal, but most will allow you to borrow the full amount that the car is worth.
Car Loans are Widely Available
The final major benefit is that car loans are widely available. There are countless lenders out there that will be willing to loan you money for a car, regardless of what your credit score is like or whether or not you have bad credit. This means that as long as you’re buying a vehicle and want to go with a loan rather than paying cash, you’ll likely be able to find a bank or finance company that will give you the money you need to purchase your vehicle. Whether you’re looking for a brand new Subaru car loan, or a second hand Toyota finance option, you’ll likely be able to find the perfect finance situation for you.
