When you look at car advertisements, they usually appeal to emotions. You could have a fantastic experience driving if you buy a new model. You will also be one of the first users of cutting-edge technology. These reasons make you believe that you should buy a new car even if it’s beyond your financial capacity. You will decide to finance a car because you feel enticed to try a new model. Before you take that route, you must reconsider your decision. Financing a car might be a common option, but it’s a horrible strategy. These are the reasons to should avoid car financing.
Cars depreciate quickly
You keep paying a monthly amount for a vehicle that depreciates quickly. It’s unlike other investments like a house that increases in value over time. Cars lose value as soon as they’re on the road. If you eventually sell the vehicle, it won’t be valuable anymore. You’ll be lucky if you can get back at least half the original price. Cars aren’t an investment, and you buy them solely for practical reasons.
You’re not technically the owner
Another problem when you finance a car is that you don’t own the vehicle. It’s technically under the name of a bank or the dealership. You can see that on the document you signed. You will only be the owner once you finish the repayment of the loan. It could take years. Therefore, if your goal is to own a car, you’re not yet there. If you fail to repay the loan on time, the bank has the right to take the car back. Imagine working hard to own that car, and it ends up getting taken away from you.
The warranty expires before the loan
The average car loan lasts for up to five years. A car warranty, on the other hand, extends only up to three years. If you face problems beyond those years, you will be responsible for paying the entire cost. Imagine spending a lot more on top of your monthly repayments for the car loan. It could take a toll on your budget.
The interest rates are terrible
Most car financing options come with high-interest rates. If you pay in cash, the amount could be way lower. You can use it to buy other things or pay for the insurance. Add to that the possible fines you might pay if you fail to pay on time.
Given these reasons, it’s best not to finance a car. Keep boosting your savings until you can afford a new one. There are also other options like a car lease or buying used cars if you have a tight budget. These choices are cheaper, and you can afford to pay for the vehicle.
If you get involved in an accident while driving your new car, you could instantly regret your decision to finance it. The good thing is you can still get help from a towing company in Miami if you ask for it. Deal with the problem later, and stay calm.