Pros and Cons of a Car Financing

Most people cannot afford to pay for their car with cash. That is why they decide to finance it. You can talk to Perth car loan experts if you want to finance a car. In order for you to find out whether financing is the best option for you, it is a good idea for you to weigh the pros and cons of car financing.

Pros

Freedom to Customize

You will be the owner of the vehicle after you make all of the payments. That is why you are free to customize the vehicle that you want. You won’t have this option if you decide to lease a vehicle. In fact, if you lease a vehicle, then you will be required to return it in the same condition that you found it.

You Can Build Equity

You can build equity if you finance your vehicle. The more equity that you have on your current vehicle, the more that you will be able to save on your new one. This can be especially beneficial if you do not have the best credit. There are several things that you can do to build equity.

You will need to make sure that your car receives regular maintenance. You will also need to keep a copy of the service records. Additionally, you should maintain the appearance of your car.

You don’t want to put a lot of miles on your car. The more miles you drive, the quicker your vehicle will depreciate.

Sell Your Car Whenever You Want

Because you will own your car once you finalize the payments, you are free to sell your car whenever you want to. In fact, you can sell your vehicle even if you have not completed all of the payments. You may decide that you are bored with your vehicle, or you just need extra money. All you will have to do is transfer the title over to someone else.

No Limits Placed on the Number of Miles That You Drive

You do want to limit your mileage if you are trying to build equity. However, you are free to drive as much as you want. If you lease a car, then there may be limits placed on the number of miles that you drive per year.

Read Also – 10 Important Lessons To Learn In Financial Planning

Save Money in the Long Run

If you finance a car, then you will be completing the payments over a set time period. This can help you save money in the long run. You won’t have to make any more payments after the loan balance reaches zero. This is extra money that you will be able to keep in the bank each month.

Your Car Insurance Payments May Be Lower

There are several factors that will affect how much money you will pay for your car insurance. This includes your driving history and the type of car that you have. However, if you finance your car, then you may be able to save money on your car insurance.

Cons

You Need to Make a Down Payment

You don’t have to make a down payment to lease a car. However, you will have to if you decide to finance it.

Higher Monthly Payments

Even though financing a car can help you save money in the long run, your monthly payments may still be higher. You may also have to put up more money upfront. The reason that you will have to pay more money if you finance your car is because the total cost of the car is factored into your payments.

Depreciation

Cars tend to depreciate quickly. In fact, if you have a new car, then its value will start to go down as soon as you leave the lot. Rapid depreciation is one of the reasons that people opt to lease a car. Your car may not be worth the money after you finish paying for it.

Repair Costs

Your warranty will cover any repairs that you need to have made for a while. The typical warranty will last about 36,000 miles. You will be responsible for making the repair payments after the warranty expires.

Maintenance Costs

The older your car gets, the more it will cost to maintain. That is why you can expect to pay more for maintenance after you pay off your car.

 Author Bio:

Raymond James is a sought after thought leader and an expert in financial and money management. He has been published and featured in over 50 leading sites and aims to contribute articles to help novice financial planners. One of his goals is to impart his knowledge in finance to educate and help ordinary people create and achieve their financial goals.

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