We subject our vehicles to numerous hazards over the course of their lifespans. They’re driven day in and day out continually bounced over railroad tracks and propelled across overly recessed manholes. We force them through ice, snow, mud and countless other hazards.
Of course, automobiles don’t last forever. Some succumb to the hardships of Washington’s rugged roads, congested highways, and diverse weather. In other cases, people’s needs change, and they simply require larger, smaller, sportier or more utilitarian models.
When the time to upgrade arises, an auto loan could be the most favorable solution. Vehicle loans offer a number of advantages when compared to other alternatives.
Loans Versus Buying a Vehicle Outright
Few people wouldn’t relish in the thought of picking out a brand-new vehicle and being able to hand the salesperson a stack of money to pay for it outright. You wouldn’t have to worry about credit scores, interest rates, future financial hardships or any of the other typical concerns. Of course, most of us simply don’t have that option at our disposal.
Taking out an auto loan gives you the opportunity to purchase a used or new vehicle when you need it rather than having to spend months or years saving up enough money to cover its full value. You have the luxury of paying for the vehicle in monthly increments, so it’s less of a financial burden than paying the entire cost upfront.
Choosing a Loan over Leasing
In many cases, dealerships and their television ads make leasing sound like an amazing deal. Zero-dollar financing, low or no down payments and minimal monthly rates are only a few of the perks dealerships might place on the table. Keep in mind, if it sounds too good to be true, it probably is.
Leasing is essentially paying a dealership to let you borrow a car for a few years. Once your lease term ends, you either have to pay off the remaining balance or give the vehicle back to the dealership.
When you purchase a car, truck or SUV with a loan, it’s yours to keep once you pay the balance in full. You don’t have to worry about driving it too much or setting aside extra money on top of the monthly payments to cover the remaining balance when the lease runs out.
It’s no secret a new vehicle’s value begins to drop as soon as you drive it off the lot. Of course, the amount of money your insurance provider is willing to pay if the vehicle is totaled or stolen follows suit. In many cases, those infamous insurance payouts fall well short of the cost of paying off the vehicle and replacing it.
When you buy an automobile via a loan, you may be able to purchase additional guaranteed asset protection for a reasonable price. Also known as GAP insurance, this extra coverage literally bridges the gap.
Reworking the Loan in the Future
Interest rates certainly fluctuate over time. Even if you wait until they reach affordable levels to purchase a car, they could hit new record lows a couple of years down the road. Also, should you need extra money for a home repair or other expenses you have the option of refinancing your loan and using the equity in your vehicle to find the money you need?
Replacing your old loan with a new one offering better terms could potentially save you a great deal of money in the long run. It’s also an opportunity to lower your interest rates if your credit score improves while you’re paying on the vehicle.
On top of all that, plenty can be said for the credit-related advantages of a vehicle loan. As long as you make your payments on time each month and don’t finance a number of other significant purchases in the meantime, the loan is bound to help boost your credit score.
You have different options when it’s time to buy a new vehicle. Leasing might save you a little money from a short-term perspective, but it’s often more of a hassle and financial hardship in the long run. If you lease or purchase a vehicle outright, you could be left paying a great deal out of pocket for damages or losses. Neither of these alternatives provides the same potential credit benefits as a loan.
If you’re looking for a new car or truck, a vehicle loan may very well be your best bet. Contact us to learn more about the loans, interest rates and additional advantages we have to offer.