Nearly every vehicle owner, at one time or another, has considered their options when it comes to purchasing or financing a new car. Of course, most people would say, if you have the money to outright purchase a vehicle, then why not, but you’re probably unaware of several long-term advantages to financing a new car.
What Are The Benefits Of Financing?
Consumers shopping for a car have three options: buy it with a cash payment, place a percentage of money down and finance the rest, or lease the car, which is basically renting it for a term, then returning it at the end of the lease. Few people can afford to pay cash for a vehicle, and leasing has little to no benefits for the car buyer, leaving financing the best option.
Financing also allows you to have a wider assortment of vehicles to choose from. Whether you’re choosing a budget, compact or luxury vehicle, financing gives you that option to select what you want because you don’t have to come up with the full purchase price.
Approximately 80 percent of car buyers actually use car financing to fund their new car purchase. Financing allows you to spread payments over a few years, which also gives you more flexibility in the amount of your monthly payment. While the majority of consumers choose to finance their vehicle over three or four years, it’s also possible to stretch payments to five years, making the monthly payment more affordable.
Instalment Credit Accounts Boosts Your FICO Score
Everyone needs credit. While paying cash may seem like a better option than financing, having no open accounts, like credit cards and auto loans, will destroy your credit. If you want to buy a house, or get the best interest rates, or apply for certain jobs, you need a good credit score, and financing a new car is one of the best ways to build credit.
Experts say everyone should finance a car at least once in their lifetime, especially if you’re concerned about your credit score. Auto loans are referred to as instalment accounts by the credit bureaus. It shows up as a fixed payment period, like a four year loan, and each month reflects your updated payment amount. 20 percent of your FICO score is based on your instalment account.
Many consumers don’t worry about credit scoring and reports, however, it becomes a necessary approach to establishing good credit.
Do I Really Need Help In Buying A Car?
When buying a car, most people don’t know how to negotiate with their heads, instead of their eyes, and it ends up costing them a great car. One of the smartest ways to buy a vehicle today is by using a broker. Brokers know what to look for, according to your specifications, and can cut through all the hassles, and get straight to the bottom line. Instead of running through a gambit of players, with a mountain of inventory, a broker can streamline the process.
At first thought, financing, with it’s added interest, may not appeal to you, as the most favourable decision, but there are several benefits to financing a new car, and when handled right, you actually have more car-buying power.