Pros and Cons Of Car Loans

18 July 2012 22:00 - Phoebe Robinson

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Pros and Cons Of Car Loans

Taking out a car loan is a quick easy way of purchasing a nice new car. Saving for a car can take years and this is a quick alternative to saving. Taking a car loan allows you to buy a car today. There is even such a thing as bad credit car loans. If you have missed your monthly repayments you might still be able to get a bad credit car loan. The interest rates will be high but the option will still be there as the vehicle that you purchase will be used as collateral for the lender. Moreover if you are saving for a car it may mean that you buy a cheaper second hand vehicle. But if you get a car loan it is likely to mean when you buy the car you invest more as you want a vehicle that will perform well and last longer.

However as with all financial products there are always some cons to look out for. For example making monthly repayments on a car loan can leave less money available to cover the cost of other essential household bills.  Also you must not forget that whilst a car loan is better than a large credit card balance, it is still personal debt and will be a strain on your finances.  On top of this it must be remembered that having bad a bad credit rating can mean that you will have higher monthly repayments and interest payments and also you will be charged a high APR. 



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