Top Reasons Why You Should Use Car Finance
The following is a guest post on behalf of Money Supermarket.
Financing your next vehicle may be a no-brainer, but many people are in the market to lease or even pay for their cars in cash. While these may seem like the best ways to obtain a brand new car without being subjected to a stringent loan agreement, the advantages of financing a car to own it outweigh the rest.
Why Financing is Preferable
Showing up to the dealer, cash in hand is great if you can afford it, but the fact is that many people scrimp and save years to pay for a car in cash. If saving has been this difficult for you, it’s not a good idea to pay for the car in full.
Taking on an auto loan allows you to spread out some of that cost, so you aren’t parting with all of your money at once. You can use a hefty chunk of your savings for the down payment, but wiping out your savings is ill advised. This is because it’s a much wiser decision to leave an emergency fund in your savings account for those unexpected costs that may arise.
Financing will also allow you to get a vehicle that you otherwise cannot afford upfront. This way, you have your choice of safer cars more suited to your family’s lifestyle, rather than settling for something that’s already twenty years old and been through quite a few owners.
This doesn’t mean that you should take on a car loan bigger than you can afford. Compare car loan rates on websites like moneysupermarket.com to see if you can afford the monthly payments of a more expensive car. If your budget is stretching it, reconsider a less costly model.
Financing an automobile will even help boost your credit score. Even if you have had financial trouble in the past, many dealers extend loans to bad credit customers. This means that you can begin to rebuild your credit by making those monthly payments on time, which is something you cannot get from paying for a car in full.
Although leasing does have its advantages, buying a car that has a decent resale value could end up being an investment. You won’t get your money back years down the road when you go to resell, but you could end up with a nice trade-in value to get that next new car.
Regardless of the auto loan you choose, be sure to research the lender information carefully. Know the terms of the loan, additional fees, monthly payments and penalties associated with making late payments or even double payments. Some lenders will not allow you to make early payments without a penalty, so don’t be afraid to ask questions. Applying for any loan is a big deal. Be prepared for anything.