Is Financing a Car a Good Option?

Purchasing a car is a great expense, whether it is new or used. Buying anything with cash is a very good thing to keep yourself away from the debt trap, But, always paying with cash, especially for a car or some other expensive thing, is not always possible. Financial problems can also be the reason sometimes! So, financing a car or we can say "buy a car on finance" is the best option for those who can't afford a car in a one-off payment. Finance products generally mean that people are able to buy the products easily even if they have a tight budget. Financing a car simply means dividing the money over several months, which feels easy to pay. Sometimes, it is a better option for people who can only spare 4000-8000 every month.

What are the advantages of financing a car?

By financing a car can drive as much as you want. There're no specifications or limitations just like in the case of leasing a car.
Financing a car through a bank can improve your credit score. Paying EMI on time can build your credit score and with a good credit profile, you can easily apply for another loan in the future.
If your car is in a good condition or if the value of your car is equal to what you owe, you can trade it or sell it and you can easily pay off the loan with that money and the leftover, you can save that to buy a new one.

DISADVANTAGES OF FINANCING A CAR

After signing an agreement, you can buy a car that you want to buy and become the owner. But sometimes the process of saving money and just signing an agreement can get you trapped in a chain that has never-ending car payments. And also, you can't do any modifications to it until and unless you deposit all the money and become a legal owner.
If in any case, you fail to make those monthly payments, your car will be repossessed and this will make you left in a debt with no car. Also, this situation will negatively impact your credit score.
The new car hits badly with the depreciation, so, getting a loan for a new car and because of depreciation you will be paying for the installments that don’t match the value of your car.

What are the benefits of second-hand car finance?

Many people are appreciated buying a new car, as, buying an old car or financing a car has its benefits.

We already know that pre-owned cars are cheaper than new ones, so as compared to a new car, EMI for your used car loan is probably lower. The lower loan amount can bring your EMI drastically down, which is the best thing about financing a used car.
"Longer repayment tenure"- which simply means, the bank or the lender gives you a long time for repayment of your loan for a "pre-owned vehicle".
Loan-filling for a second-hand car does not need many formalities, only some limited documents are needed and the process is done only in a few steps.
Some of the banks also provide 100% finance. You get the full amount loan especially if the second-car purchase is lesser.

So, now the question here arises is it a good idea to finance a car?

It depends on your financial condition. If your financial situation is ok, you can pay with cash where in one off-payment, you're the owner of the car you buy. But if not, you can finance your car and pay the EMI monthly. But, make sure the amount you pay versus the value o the car you buy. If you do not deposit a down payment and finance the entire amount, you will be owing yourself more than the value of your car. As compared to the loan for a new car, pre-owned car finance has more benefits. So, here ABE deals with pre-owned luxury cars and second-hand cars with finance also available.

10 Tips for Financing a Car