When Should You Buy a Car with Credit Instead of Cash?

 

Many people consider buying a car as an investment, but that’s not necessarily correct. Investment makes you money. 

Your car is an asset because you can sell it later for a chunk of money. Therefore, when you walk into a dealership, it’s crucial that you know how you’re going to pay for it. While paying cash may seem a good decision, buying a car with credit can be a better one. 

So, when should you buy a car with credit instead of cash? Let’s find out:

You have a limited budget

When you want to buy your dream car, but you don’t have enough cash to pay for it, you have only one option: settle for less—and no one likes that.

Now, it doesn’t mean that inexpensive cars aren’t good, but there’s a significant difference between new, high-range vehicles and older ones in terms of functionality and performance.

Expanding your price will allow you to buy a better and newer car—one that you want, one you deserve—not the one that you’ll get stuck with.

So, when you’re short on cash, buying a car with credit is a smart choice. You can pay a larger down payment if you wish to keep your monthly installments to a minimum.

You think long-term

If your budget is tight, and you plan to buy a cheap car, it’ll hurt you in the long-run as old vehicles are likely to present numerous problems down the road (no pun intended).

The repair costs to fix your faulty vehicle will eat up a sizable chunk of your money, the one that you could’ve used to pay the installments for a new car.

On the other hand, new cars typically come with warranties and comprehensive inspections performed by trained technicians, so you can rest assured of the quality.

Car financing will pay you dividends in the long-term, saving you money in repairs and allowing you to drive a high-end vehicle that will last longer and perform better.

You want to improve your credit

If you want to build your credit history, car financing is an excellent choice. Buying a car with cash will do you no good, but using credit will help you improve your credit score.

Car financing is equally beneficial for you if your existing credit score is bad, and you want to rebuild it. This way, you won’t need to take a loan to increase your creditworthiness.

However, you must include the car loan repayments in your credit portfolio to ensure your payments are reported to the credit bureaus.

If you keep up with your monthly payments, more specifically, make timely loan payments, you can expect to see a boost in your credit score by the time the loan is paid off.

About Tyndall Federal Credit Union

Tyndall Federal Credit Union is a full-service financial institution in Florida that offers a wide array of financial services, including auto loan, personal loans, credit cards, mortgage lending, and more.

 Based in Panama City, FL,the company is one of the leading credit unions that provides low-rate loans for cars with repayment plans that fit comfortably into their clients’ budgets. Call 850-747-4321to start your application or visit their website to learn more.

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