Most car buyers can't afford to buy a car outright with cash, and they're forced to finance the vehicle. But if you have the cash in your personal savings, weigh the benefits of buying a car with your own money, and decide if this is the right decision for you.
No Credit Check
The ability to buy a vehicle often depends on your credit history and whether you can qualify for a loan or financing. But if using cash for your next vehicle purchase, qualifying for financing isn't a concern, and you can get the car with no credit history or with bad credit. Auto dealerships only check credit when a buyer plans to use a lender to finance the car. Credit history not only determines approval but also determines the interest rate on the vehicle loan.
Financing Costs
Financing a vehicle purchase generally involves paying interest or financing fees unless you qualify for zero percent interest. Financing costs increase the final loan balance and plays a huge role in the monthly payment. Borrowers who qualify for a low interest rate pay less each month than someone paying a higher interest rate. If paying cash for a car, financing costs are not an issue, and you'll ultimately save money on the vehicle.
No Auto Loan Payment
Financial situations can change rapidly -- layoffs, job loss, illness and divorce can affect your ability to afford your auto loan payment after acquiring financing. Buyers who pay cash for their vehicles own the cars outright. Therefore, if they encounter unexpected financial hardship, they don't have to worry about a car payment or the risk of repossession due to the inability to keep up with their payments.
Upside Down Loan
Because cars depreciate fast, the chance of becoming upside-down on a vehicle loan is high. This refers to owing more than the vehicle's worth. Borrowers in this situation may experience difficulty when trying to sell the car or deal with negative equity when trading in a car. But if paying cash for your car, you won't run into this problem. You can sell the car or trade it in without worrying about being upside down.
0 comments:
Post a Comment