Is Financing A Car With A Loan A Good Idea?
There are multiple ways to finance a car. Financing a car with a loan is the most common way to do it and can be done for both old and new cars. Car loans are probably the best way to get a car besides buying it outright with cash and there are several reasons for it.
1. You own the car the moment you sign the papers
Unlike a leasing plan, a car loan makes you the owner of the car the moment you sign the papers. It is not the case with leasing plans as the lender owns the car from the beginning until the end of the contract. For a lease, you only own it if you pay the residual value.
2. There is down payment
Anyone can get a car these days with no down payment. This makes cars affordable to anyone. What is important is to not go for something overly expensive since when you take a car loan it means that you cannot afford to buy it outright with cash. It is quite common for people to get cars they cannot afford.
3. It is cheaper than a lease
Even if the monthly payments are smaller on a lease plan, car loans imply fewer costs. You save money by doing maintenance work on your own, getting your insurance. You can also try to negotiate the loan interest rate or turn in your old car to get a discount.
Ideally, you should pay for a car in cash but this is not always possible. What matters is to pick a car within your budget, for which you can afford the monthly payments. Another important thing that can be done is to first negotiate the car price, before mentioning that you plan on financing a car with a loan. Dealers are less likely to offer discounts on a car when they know you plan to get a car loan.