Buying a car is no longer a status symbol, but rather a necessity. However, cars aren’t exactly cheap, and a lot of people cannot afford them easily, and need financial aid such as a loan, to buy it.
However, like for most things, there are both pros and cons to getting a car loan – or any loan, for that matter. It is a path to be treaded carefully, and luckily, there are ways just to do that!
Although it may not be easy to manage a car loan, given there are so many other needs to take care of too, having a car does make life so much easier! So dive right in to see if getting a car loan makes sense for you.
The Pros of Getting a Car Loan
There is practically a bank everywhere you turn, and almost all banks offer car loans to individuals who are in a position to repay them. Other than that, you can also get a car loan from the dealership or a private lender.
Whether you have good or bad credit, the chances of you getting a car loan are pretty high, and therefore most people don’t even give it a second thought.
Flexible Repayment Options
Instead of having to cough up thousands of dollars at once to buy a car, a loan offers you the opportunity to pay in instalments for a given period of time such as 5 or 10 years, depending on the lender and the loan terms.
This way, you are able to prioritize other needs since the car is taken care of by the car loan. This makes it very easy for almost anyone with an income to buy a car, along with making their life more flexible.
Opportunity to Buy What You Want
You can customize your car loan depending on which car you want to buy.
Maybe you are eying a car, which is currently out of your budget. However, with a car loan, it is possible to expand your budget and buy your dream car.
Few Requirements Needed
This is essentially a secured loan, which means that the asset secures itself, and in such cases, the requirements for the loan are less than what you would expect with other types of loans.
The lender may actually just require proof of income, and the car you want to buy!
Cons of a Car Loan
A Loan is a Huge Liability
Whatever said and done, taking any loan is a liability. Taking a loan means that you must make room for loan payment in your monthly budget.
Increasing your liabilities, especially in case you are not financially stable, can seriously strain your finances.
Car loans attract lots of other fees that you may be unaware of, especially if you are financing it through a bank. There will be application fees, insurance fees, depreciation, etc.
All of these will be factored into your monthly payments.
Although car loans come with competitive interest rates, in most cases what you see is not what you get, and the lenders tend to have many additional costs that will increase your monthly payments.
Cars depreciate greatly each year, which means that the amount of money you spent paying for the car can never be recovered if you ever decided to sell it.
This is a huge disadvantage because you are not likely to make more money out of your car.
With car loans, you really have to weigh the pros and cons before making the decision, although the pros always win as cars are a great convenience, especially if you are a busy person.