Some people argue out that you should go for what you can afford. It is not always the case especially in situations you urgently need a car either for personal or business purposes. Other situations such as the need of traveling for long distances, comfortability while traveling, going places with young children might require one to be with a car and not always one can afford a car by cash thus need to take car finance.
According to Motor City in 2018, 1.4 million people used cars bought on finance. This was an increment of 8% from 2017 showing people are changing their attitude on car financing. Research from Auto-Traders in 2019 revealed 36% of car buyers took out a financial agreement as they could not afford the cars they wanted. It is not a bad thing financing to buy a car as it has its benefits and to note, the buyer has to consider their financial ability.
Benefits of getting a car finance
1. Enables one to keep their savings
This is because there is no need to pay money in a lump sum. One may opt to borrow 100% of the car’s purchase price depending on the seller’s terms or pay in cash some amount then borrow the rest. By not giving fully your savings, one has the chance to re-invest in a money generating projects such as mortgaging then use the profits to repay the loan, solve emergency cases such as medical bills. One can have some accessible funds as compared to draining their counts for a cash payment of the cars.
2. One can opt for a better and quality car
This is because one is not bound by the amount of money they have. The limit is higher as most times, one gets a loan higher than what they earn. By this, one gets a variety to choose from. One can get a car that is more fuel-efficient and benefit from reduced extra costs for repairs. Compared to buying a low-quality vehicle then reselling it after a while, it is much better to buy a good quality car. It also saves on costs such as depreciation costs when reselling. It saves too on the time and hustle of seeking customers.
3. Improved budgeting
The lender and buyer usually agree on an amount to be paid back per installment. The installments could be weekly, binary, months, depending on both their terms. With these fixed terms, even when the economy changes and interest rates go up, the loan remains unaffected. The buyer can spread the cost over a long per of time making it easier for them to pay. With the agreed amount, it makes it difficult for one to overspend or make unplanned financial adjustments.
The buyer can know how long they will pay the loan. A point to note is, one should take a loan they can manage.
4. No collateral/ security is needed
According to THE NEWS WHEEL, most lenders have no problem with your car being your security. Failure to pay results in the lender seizing your car. This gives the buyer a kind of safety as one will not fear his or her property being auctioned. This a low-risk kind of loan.
5. It is great for credit history
The buyer is required to be on top of payment deadlines. Once the buyer repays the loan at the agreed time and does not break the lender’s terms, it gives them a better chance to be rendered money in the future. This is because they have created trust with the lender. It gives them an easier opportunity to borrow money for investments, emergencies, or other reasons in the future as they have a clean record when it comes to repayment in the past.
6. Car loans can come with added advantages
In cases where the buyer buys a car in the same company that renders them the loan, some companies could give six months free road tax, free servicing, full vehicle inspection before driving home, free fuel. Some will sell the car on tax-deductible terms especially when one owns a business and the business borrows money to acquire a company car. This is mostly to curb the level of competition in the car selling business. By having these offers, the buyer can have a loan added value for the car.
With the above-named benefits, for one with a dream to have their car, it is easy. Also, for those facing public transport challenges with their businesses or personal purposes, make a plan of having your car. The process of taking a car loan is simple, uncomplicated. Unlike the gone days, owning a car has been made easy. What one ought to be careful with is the choice of the lender. There is dealer financing and bank or credit financing. Study each well, know their pros and cons before taking a loan with them.