Car loans allow a driver to purchase a car at full price by making monthly instalments over a period of time. After reaching an agreement with a lender or financier regarding the initial down payment, interest rate, and time of the loan, you’re able to drive your new car off the lot. While most people would love to be able to pay for a car with cash at the time of purchase, borrowing money is a common requirement for most buyers. If you’re on the fence about it, here are five benefits of getting a car loan.
You may be tempted to purchase a used vehicle simply to avoid having to take out a loan. But in the long run, this isn’t always the most cost-effective option. Used cars tend to break down more often, sometimes requiring costly repairs. When you finance a new car, you get the peace of mind that you won’t have to pay for those repairs for quite some time. Not to mention, many newer cars are more fuel efficient, meaning you spend less at the gas pump.
No collateral needed
To get a car loan, you technically don’t need any collateral. This is because your car will automatically serve as the collateral for the loan. Failure to pay your outstanding balance will lead to the lender seizing your car.
Nowadays, car finance options are usually accompanied by bonuses. Auto loan financiers usually give added perks such as free road tax, free servicing, and free fuel. These bonuses are not usually the best reason to take loans, but they definitely don’t hurt!
When you reach an agreement on your car loan, you get to decide how much money you pay each month. This means you won’t be overspending or having to make adjustments elsewhere in your life. With a reasonable car loan, you could even have enough money left over to start saving for your next new car.