If you’ve ever tried to buy a car, the question of whether you should do so on finance has undoubtedly come up. You can either buy the vehicle outright with savings or take out a loan and pay it back over the coming years and months.
Using A Personal Loan To Finance A Car Purchase
The most common method of buying a car is to take out a personal loan. People usually do this when they don’t have enough money to buy a vehicle outright, but need one because of work, family circumstances or health.
Personal loans for cars usually work out to be quite cheap. The lender knows that if the person buying the car cannot repay the loan, then they can repossess the vehicle, sell it, and make their money back. The car is what people in the industry call “collateral.”
It’s worth pointing out that the total you pay in monthly payments will likely be more than if you bought the car outright upfront. Unless finance is zero per cent interest for the lifetime of the loan, then you will end up paying extra money in the form of interest.
What About Credit Scores?
Getting car finance requires having a reasonable credit score. A decent credit score tells lenders that you’re the sort of person who is likely to pay them back, and so they will be more willing to lend.
Can You Use A Credit Card?
Some people use credit cards to buy new cars. Credit card purchases offer buyers extra protection.