To finance the purchase of a new car, should you use a car loan or not? Very often, using credit as a method of financing is an obligation for households who do not have sufficient savings to mobilize.
But it also sometimes happens that households with wealthy incomes and comfortable amounts saved still use credit to buy a new car. This means that the conditions of a car loan must have some advantages... let's try in this article to see the strong points and the weak points of this method of financing and ask ourselves the following question: for or against the car loan?
What are the advantages of taking out a loan to buy your car?
If you take out a loan to buy your car, it is possible to borrow with a repayment period spread over 6 years for used cars and 7 years for new ones.
The first major advantage of a car loan is the possibility of affording the vehicle you want, however, that you have a consistent debt capacity.
Another great advantage of car credit offered by banks or specialized organizations is the possibility of starting to repay the purchase only when it is delivered.
You may have never had a bad experience with a car, but you are not immune to a defect, a manufacturing problem or even a problem at the time of purchase. delivery. A car loan provides real freedom by allowing households who do not have the necessary savings to buy a new car to still access a model that suits them (city car, sedan, minivan, 4x4 or even sports car). This freedom comes at a cost, with interest charged each month and leading to the repayment of a larger amount of capital than the amount actually originally borrowed. However, with attractive loan conditions and a low rate, the allocated credit can be an excellent solution to keep some savings aside and afford a new vehicle!
No need to mobilize all your savings and expose yourself to real difficulties in the event of a health problem or job loss, for example. Credit, when used wisely, allows you to balance your budget. A loan is a real commitment on the part of the household receiving the money. A commitment to keep the promise of reimbursement. This means that before subscribing to a credit offer, it is important to check that you have the capacity to sustainably repay the amount that will be granted to you. L
Banks carry out complete checks, looking in particular at your income but also at your account management. But it’s also up to you to use credit in moderation! There is a real duty of responsibility for everyone with regard to credit, and in particular the credit that financed your car.
First negative point, it can be a tool to destabilize a household if it is used without restraint. Using credit repeatedly and not concertedly can lead to over-indebtedness.
Second negative point of a loan, the cost! As we have already seen, credit requires interest. It is sometimes possible to take advantage of offers with reduced rates or even a zero rate, but in most cases, you will have to deal with a rate that will lead to interest repayment.
Car credit or not, how to choose?
It is difficult to give a definitive answer to this question of whether to be for or against. Some people swear by cash payment and refuse any form of credit. Others, on the contrary, take advantage of the freedom allowed by credit to access goods and services (in our case a car) that are inaccessible by limiting themselves to a cash payment. So, it’s up to you to make your informed choice when purchasing your new car.
Auto credit allows:
- to buy a car without having the necessary amount in your bank account at any given time;
- to spread the repayment over a period that is consistent with your income, and thus allow you to absorb the cost of your new car;
- to keep available savings aside to mobilize in the event of a personal or professional problem;
- to drive a new car or a used car, depending on your needs, and to be able to change it whenever you want.
- to buy a car without having debt! Once you have signed a contract, it is binding on you and must be reimbursed;
- to buy a car free of charge!
The interest linked to your credit will increase the initial purchase price of your car, whether it is new or used. Credit is therefore not the most economical solution. However, with relatively low interest rates, most consumer credits do not have an exuberant cost.
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