There are few transactions in your life (aside perhaps from the purchase of a home) which will cost as much as the purchase of a vehicle. Cars, trucks, bikes and other modes of motorized transport are generally the second most expensive purchase in the life of the average consumer. It is because of this fact that few people are ever in the position to pay cash for their vehicles.
Almost everyone uses some form of credit for their vehicle purchase. Like it or not, this is nothing more than a fact of modern life. Most people use car loans in order to afford the car that they want. This can be a perfectly sensible and relatively safe way to purchase a vehicle. Indeed there are several reasons why it would be beneficial to purchase a car using a car loan rather than not use a car loan.
Most people have some form of savings. Some have maybe $1000 dollars or so, whilst other people’s savings run into the tens of thousands or even hundreds of thousands of dollars. The fact is that these savings, whilst they may be more than enough to afford you a new car outright, are not saved for the purpose of a new car. Most people save for their retirement or in case of an emergency. Tempting as it may be to pay cash for a new car (assuming that you have the money ready) it does not make all that much sense. Whilst it is true that unless your loan is interest free, you will end up paying more over the course of the car loan, the important thing is that your emergency savings will still be in tact, and this is worth paying a little extra for.
Car loans give you the luxury of keeping your “rainy day” money for a rainy day. So in effect, a car loan is buying you more than just a new car. A car loan is buying you peace of mind and reassurance that should the worst happen and you need access to your savings, that they will not be all tied up in a vehicle but will be readily available for you to access.
You can ask any business man and they will tell you that cars make awful investments. As soon as you drive a new car out of the dealership you are reducing its value quite dramatically. So why on earth would you invest your savings in a new car? It would make no financial sense for you to do this. The only sensible way to purchase a new vehicle is not to plow all your savings into something that will show no return, but rather to take out a car load. At the very least, this will allow for you to invest in something that will have a better chance to make a profit and drive a new car!…Continue reading