You’ve decided to go for it and are on the look out for your new chariot. Hold your horses though, this is something you need to seriously think about. For the most part, we need to know how you are going to pay for your new ride. Will you have the money to pay for it in full at the time of your purchase or are you going to need a car loan? Lets talk about it.
Maybe this is the first time you're thinking about buying a newer car and you're wondering what a car loan is. Basically, its money that you borrow from a bank or lender and you pay them back over time until they have received all of their cash back. Car loans generally have interest so ultimately you will end up paying a little more for the vehicle in the long run.
When looking to change vehicles a lot of people go for a brand new car. Sometimes we like to get a little ahead of ourselves. Check out some preowned cars before committing to buying something out of your price range. The chances of finding a used car with low miles at a great price are pretty good. In the end, the car with be more affordable, and while it may not be brand new, it will be brand new to you. This way, you will probably be able to pay cash up front and won’t have to worry about paying off a loan.
Let’s say you are actually thinking a car loan is the way to go. Your deciding factor should really be whether or not you can afford it. With a car loan you're going to be paying monthly for 3, 4, 5, even 6 years, so you need to make sure that is something you can keep up with. Along with that, you will still need to pay for car insurance, gas, and maintenance so you must think about those factors as well. Plus, depending on the loan’s interest, you will actually end up spending more than the actual price of the car to pay it off. A car loan is something you need to think about long term. Shop around different places before picking where to go for your loan. Different lenders have different interest rates and deals.
With all of this in mind, if you can afford to keep up with the payments and are willing to take on the responsibly a car loan might be the way to go. If not, check out some older, preowned cars, or keep your current car and money and continue saving for a new one in the future!