A car can be expensive and buying one is not as easy as going to the grocery store. It takes a lot of planning, and you have to decide how you want to pay for it. If you wish to make use of a car loan or if you think you’re better off saving up for it yourself, you need to factor in your income and how much you can put into a car.
If you’re on the fence about how you want to get a car, it is essential to know how different your life will be with either choice.
To help you decide, we’re here to show you the pros and cons of paying for your new family car with cash or with a car loan:
Buying a Car with Cash
Pros:
- Simple. If you had the money for a new car, the transaction is quite simple. You go to the dealer, you ask them for the make and model vehicle of your choice, and they tell you when you can pick it up. After you hand them the money, the car is yours to keep. It’s a simple transaction.
- Buying cars in cash can help you avoid interest rates and the process of paying back a loan. It can prove beneficial for you and your savings in the long run.
- No Monthly Payments. Paying for a vehicle outright allows you to enjoy your income and rebuild your savings.
Cons:
- Older Cars. The cars you can get for cash can be limited. More often than not, newer vehicles are offered at a higher price. Unless you have a large sum in your savings account, your car choices may be limited to older model vehicles that have seen a few hundred miles.
- Can drain your savings. A car, even a second hand one, is still pricey overall. Paying for it in one go can put a dent in your savings. Because of the amount spent, you may need to spend a lot of time playing catch up as you try to rebuild your savings.
- You need to wait. Speaking of taking time, you need to wait before you can buy your car in cash. It will take a lot of saving on your part, and by the time you have enough, the car you are looking to buy is already gone.
Buying a Car with a Car Loan
Pros:
- Better Choices. With a car loan, you have better choices in vehicles. That includes car models ranging from brand new to late model vehicles. More modern cars can also mean that they are in better shape compared to cars that are at least five years old.
- Can Help Build Credit History. If you have bad credit and want to help improve your score, a car loan may be what you need to help you out. Making payments on time every month shows lenders that you are responsible and can help improve your credit history, which can prove beneficial for you over time.
- Keep Your Savings. It’s no fun to use up all of your money in one place. When you get a car loan, you can keep your savings for a rainy day. Now, you will be free to use it as you see fit, while still enjoying a new vehicle.
Cons:
- Monthly Payments. Allocating a portion of your monthly income to your car loan can be challenging to manage. But as time goes on, you will learn to get used to it.
- Lender’s Limit. Some lenders can limit your choice in the vehicle depending on what they currently have in stock. That is why it is essential to find a reputable car finance company that will give you better options.
- Not Yours (Yet). When you take on a car loan and drive away in your new car, your first thought is that you have finally purchased a car all on your own. However, while you are still paying for it, and if you consistently fail to make payments on time, it can result as a default and the loan company can take it back.
Overall, if you need a car straight away, a car loan may be a better option. It allows you to get the car that you need straightaway. Luckily, there are plenty of car loan companies in and around Newcastle that will be more than willing to help you out in your time of need. So, give them a call today, and you can soon drive away in your new family vehicle.
