Why Financing a Vehicle is Often the Better Choice
After you have found your dream vehicle, you need to choose the best way to pay for it before driving it out of the dealer’s lot. Basically, you have two options: financing a vehicle with a loan, or withdrawing a substantial amount of your savings to pay cash upfront. Each mode of payment has its pros and cons. Your final choice will depend on the type of vehicle, the cost, the length of time you want to use it, the amount of money you have saved and your credit rating. Here is a brief comparison of the two methods of purchasing a vehicle.
Paying for a Vehicle with Cash
Paying cash for your vehicle means that you will pay the exact price advertised by the dealer without any extra charges. A cash deal can save you interest payments and finance fees which can increase the total cost of the vehicle. It also allows you to use the vehicle for as long as you want and to sell it off any time you desire since you have full rights to the vehicle and you are not making any monthly payments.
Cash deals however have their drawbacks. When you pay cash, you must take out a huge chunk of your savings and this can put you at a serious risk. If you have an emergency like unexpected medical expenses, or a job loss, it will put a serious strain on your finances. Also, paying cash means that you are putting a large amount of your savings on a depreciating asset. Your vehicle’s value will continue to reduce with every year and every mile you cover. Cash payment also places a limit on the type of vehicle you can afford to buy. Since most customers will not save up to $25,000 to buy their dream vehicle, they may have to purchase an older used vehicle.
Financing Your Vehicle Purchase
Most North Americans choose to finance their vehicle purchases because it’s often a more practical method than paying cash. You can obtain financing through a bank, credit union, auto finance company, or a vehicle dealer.
Financing a vehicle allows you to keep your money in the bank. You will be able to use it to finance profitable investments such as house payments, mutual funds and bonds. Financing offers you an opportunity to save your cash to handle emergency situations.
Financing can also help you get a newer vehicle with more features than you would have been able to otherwise. Instead of restricting yourself to an older vehicle, you can leverage vehicle financing to help you afford a better or newer model which will perform better and last you longer.
At NewRoads Financial, our consultants will help you find the financing plan that works for you. This means that your vehicle loan will put less pressure on you financially every month. Financing a vehicle with NewRoads can even help you improve your credit score. If you settle your monthly payments promptly, your credit rating will rise, making it easier for you to qualify for loans, credit cards, and lower interest rates in the future.
Get Approved for Financing with New Roads Financial
At Neww Roads Financial, our finance experts will work with you to help you finance a vehicle on your budget. We can help you get approved for a loan even if you have poor credit or have experienced financial difficulties in the past.