Why Financing A Car Is Not Such A Good Idea
At some point in life we all find it difficult to navigate the world of credit. If we have too little, we can get declined for loans and mortgages on the foundation that we are not able to provide any financial responsibility; however, if we have too much we can get punished for been unable to live within our means. Of course, the world of credit allows us to buy the things we have always dreamed of like a house, car or maybe a holiday.
More specifically, credit can sometimes be a helpful means or a great way to obliterate your finances.
When it comes to getting a car loan, the rules are no different. If used responsibly, a car loan can build up your credit, proving to future lenders that you’re a responsible borrower with a great track record. However, you should only take out a car loan under certain conditions, and if any of these circumstances apply to you, do NOT finance your car!
You have a less than perfect Credit History. Are you really in a position to pay thousands of pounds in interest just because you’ve had the misfortune of a few late repayments. In all probability NO. This is fundamentally why (if you have bad credit) you should always save for your next car purchase instead of paying over the odds in elevated interest payments.
It’s An Old Car. Dealership financers are famous for pushing dirt-cheap financing terms onto otherwise ignorant consumers. Why is this, you might ask? Simple: old cars break down faster, but you’ll still be forced to pay off the loan, even when you can’t drive the car. Feel like paying two car loans for the price of one car? Didn’t think so – so do yourself a favor by not financing a clunker or a car that’s more than four years old, especially if the life of the loan extends longer than two years.
SUV’s are safer. Although it’s a well known fact that SUVs show off a good safety record, they are rapidly going out of fashion. Let’s face it, they’re BIG, noisy and not easy on the wallet either! Whatever you do don’t finance an SUV!. You’ll be paying more in interest for the foreseeable future than what the vehicle would be worth in a year or two.
Some Car Manufacturers are on the verge of bankruptcy. Unbelievably, some car manufacturers could be out of business within the next 12 months. As a consequence, they are desperate to sell their cars to say afloat. But watch out, if your Automaker goes bust, you could find that your warranty may not be guaranteed. Take time to research your chosen manufacturer’s state of health, and avoid financing the vehicle at all costs.
Accordingly, do the right thing by saving for a car that is within your budget, and avoid financing a car within the current climate – your bank balance will be better off for it.
