Pros & Cons of Purchasing a Car with a Car Loan
If you’re eager for a new car, a personal car loan could be the best option for you. When properly managed, loans put you in greater control of your buying timeline and give you more financial freedom. However, loans should be carefully considered before you rush into one. Below, we list some of the key pros and cons of purchasing a car with a car loan.
Advantages of personal car loans
Drive your car off the lot today – Nobody wants to walk into a car dealership and fantasize about driving their dream car off the lot in another two years’ time. You want to drive your new car home today! A personal car loan puts you behind the wheel as soon as you’re ready.
You don’t have to pay everything upfront – Unless you’ve succeeded in saving thousands of dollars to purchase your vehicle with a one-time payment over the counter, a personal car loan is your best bet to get the car you need when you need it. You don’t have to put the entire cost of the car down before you can claim it. Borrowing allows you to space out your payments in a way that works better for your financial situation.
Give your credit score a boost – Every loan is an opportunity to build a better credit score. By taking on a personal loan, you can boost your credit score simply by making your payments on time! This will put you in a better borrowing position in the future, when the time finally comes to buy yet another new car.
Disadvantages of personal car loans
Loan interest will add to the total cost – Loans collect interest, and that interest will ultimately add to the total cost you pay for your new car. The shorter the loan term, the less time your loan will have to collect interest, but some additional cost is, ultimately, unavoidable.
You risk losing the car if you default – While personal car loans are a great opportunity to boost your credit score, they also present a risk. Failure to pay your car loan could result in a default, and your lender may need to repossess your car in order to pay down their losses.
The car will have lost value by the time you’ve paid for it – It’s often said that cars lose half their value the moment you drive them off the lot. While that’s a bit of an exaggeration, the truth is that cars do depreciate in value quickly. By the time you’ve paid off your personal car loan in full, the car you purchased will be worth considerably less than what you’ve paid for it.
Seek out the right car loan for you
Need an unsecured personal loan to buy your dream car with cash? Make paying for your car easier and faster with a personal cash loan from Nectar! Nectar offers Kiwis some of the most competitive rates and flexible terms for car loans New Zealand wide. Our 100% online borrowing process is fast and simple. Get started today!