Car Finance Allows Room For Investments

Car Finance Allows You More For Investing

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If it’s time for you to purchase a new car, you have a couple of options — use cash to purchase a vehicle or take out a loan with a car finance program. Other options to obtain a vehicle would be to get a Stratton Finance Novated Lease . Each option has its own pros and cons. The biggest benefit of using a car finance option is that it frees up extra money that can be used to invest in other assets. This is one of the top reasons why you may want to consider taking out a car finance loan.

How Car Finance Works

If you are applying for a car finance loan, lenders will need to determine how much risk they are taking on by allowing you to borrow money. They can determine this by looking at your credit score. The higher your credit score, the lower the interest rate will be on your loan. It pays to have good credit when you choose to borrow money. A poor credit score will only lead to higher interest rate payments and drain your cash much faster.

Making Payments

When you take out a new car loan, you also need to decide on a time frame for the loan. During the length of the financing, you will be required to make payments that include interest plus principal. This period of time can range from 36 months to six years. While it may be convenient to stretch this out over a longer period of time, this will also raise the amount you are paying for interest.

Down payment

The amount you pay each month is also determined by the amount of your loan and how much you initially pay for your new vehicle. If you have saved extra cash, a larger down payment will reduce your monthly payments and interest on a loan. You will have to decide if any extra cash should be used for a larger down payment or if it may be used in better ways such as investing.

Benefits of Investing

The value of a car will depreciate over time. New cars depreciate by a rate of 15 to 20 percent after they’ve been driven off a dealer’s lot! It’s probably not the best idea to sink extra cash into an asset that only depreciates. With today’s low car finance interest rates, it makes more sense to keep your down payment low and invest in an asset that has a decent rate of return. If you can find any type of fixed return that pays you more than your car finance interest rate, you are ahead of the game. A popular and affordable type of vehicle would be Japanese-branded vehicles such asĀ Toyota Finance Stratton.
As you can see, using a car finance loan is advantageous to your budget and financial portfolio. Use money wisely to help increase your net worth and purchase a new car.

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