Buying a vehicle is one of the biggest financial decisions someone can make. For most prospective buyers, it can be hard to decide on choosing the right financial option. There is a lot to consider when you’re planning to buy a vehicle. In this article, we’re going to look at the different financial options to pay for your next vehicle. Hopefully, we can make the decision a little easier for you.
Paying for your vehicle: cash vs finance
After you’re done choosing the right model and colour for you, next comes the important choice of how you’re going to pay for it. Do you finance your new vehicle or use your hard-earned cash you’ve saved up for a while now?
There are plenty of advantages and disadvantages when it comes to either paying cash upfront or the finance route. Let’s dive a little deeper into each financial option.
Cash is one of the simplest ways to pay for your new vehicle, and at first glance, it may be the cheapest option too. You simply pay the amount agreed upon. You don’t have to keep worrying about monthly payments and interests on a vehicle loan. However, paying cash upfront isn’t always possible for a lot of people when it’s time to buy a vehicle. Waiting to buy the vehicle until you’ve saved enough money may also not be an option for various reasons. Here are the pros and cons of using cash when buying a vehicle.
Pros of buying a vehicle using cash:
- Easy one time transaction
- No interests
Cons of buying a vehicle using cash:
- Can take a long time to collect cash
- Can invest cash on other things instead
Another very common option aside from upfront cash payment is a vehicle loan. However, there are other finance options that can be tailored to your specific needs.
A secured vehicle loan allows you to take ownership of the vehicle once you purchase it. The financier takes an interest as a security for the loan. This means that they have the right to take the vehicle from you if you stop making payments. A secured vehicle loan is better than an unsecured one because you can enjoy lower interest rates. If done correctly, financing your vehicle is a very quick and convenient process. Here are the pros and cons of financing a vehicle.
Pros of buying a vehicle using finance:
- Get a reliable vehicle sooner
- Generally lower interest rates:
- Build credit history
Cons of buying a vehicle using finance:
- Paying interests
- Limits vehicle choice
There are multiple advantages and disadvantages of both. If you already have enough saved for a vehicle specifically, then paying cash upfront can save you from worries about interests and staying on top of monthly payments. Otherwise, financing your vehicle purchase through a secured vehicle loan may be the better choice if you need to get a vehicle as soon as possible. Swoop can help you discover low doc vehicle financing funding options.