Isaias Lijauco
Loans are very useful if you want to own a vehicle but have no money to buy it up front. Still, borrowing money is a big decision to make, and you need to weigh its benefits and costs in order to reach a sound resolution. To help you in that score, below are the pros and cons of getting used car financing.
Pros of Used Car Financing
It Saves You Money
If you think paying for a pre-owned car with cash is the more cost-effective option, think again! Aside from having to avoid dealing with repair or revamping costs, used car financing could also help you get vehicles with more fuel-efficient features and less mileage.
It Requires No Collateral
Unlike car collateral loans, you won’t need to pledge a vehicle as security payment when opting for used car financing. Instead, the car you bought with the funds would automatically serve as your collateral. Just remember to meet your end of the terms so your new pre-owned ride won’t get seized.
It Boosts Your Credit Score
Got a poor or non-existent credit history? No problem! Even with a low credit score, you can avail your dream ride through car financing. It can even help your credit history, as getting loans is one of the most surefire ways to boost it up.
It Helps You Budget
Secondhand car financing could also help you create better budget plans. Since you now have to pay for a new albeit used car, you need to make adjustments to your regular spending. Thus, you need to craft your budget plans more masterfully. Doing so would help you avoid tardiness, and it can even save you enough money for personal use.
It Brings Bonuses
And unlike bank loans, pre-owned car financing comes with loads of bonuses. That means you can get perks like servicing, road tax, and even gas free of charge. These freebies can get you a long way if you want to get a car and save money at the same time.
Cons of Used Car Financing
It Comes with Interest
Unfortunately, like other loan products used car financing comes with interest rates. That means you have to allot money to the interest in addition to the car’s principal amount. Thankfully, the interest rates would depend on factors like credit history and financial status, things you can control in your favor.
It Has No Insurance
Another thing that sucks regarding car financing is that they don’t come with vehicle insurance or warranty. You’ll need to buy those separately to financially protect your new ride from unforeseen circumstances. And since the car isn’t brand new anymore, you could end up paying extra just to get a nice insurance package.
It Can Be Financially Burdensome
The main purpose of getting car financing is to ease the burden of buying a vehicle. However, if you go at it unprepared, you could end up biting more than you can chew. With an approved loan, it could be tempting to go for a good-looking yet expensive ride. And while there’s technically nothing wrong with that, you need to make sure you can afford it before you choose it.
It Comes with Repossession Risks
Then there’s also the risk of your new ride getting repossessed by the loan provider. After all, they own that vehicle until you finished paying it off. To avoid watching your hard-earned car getting hauled off one day, better meet the terms and conditions of your financing contract.
Final Thoughts
Getting financing would help you better afford your dream ride, but that doesn’t mean you should get it recklessly. By considering both its advantages and disadvantages, you’ll be able to get funding to buy the best used car in the Philippines.