Is it better to buy a car with a loan or pay in full?
3 Answers
It is better to pay in full when buying a car. Here are the details: 1. The cost of buying a car. The cost of buying a car includes the body price, purchase tax, license plate fee, and insurance fees, etc. If you pay in full, you must prepare the cash in advance; if you choose to buy with a loan, there will also be handling fees and interest, etc. The interest depends on the loan amount and duration. 2. Buying a car with a loan. The cost of buying a car with a loan is higher than paying in full, and you must make monthly repayments as required. If you fail to repay on time, you will be blacklisted in the credit system. When choosing how to buy a car, paying in full can save you a lot of money. At the same time, buying a car with a loan involves more complicated procedures, requires approval, and the loan disbursement also takes some time.
I think it's best to pay for a car in full, as it's hassle-free and saves money. The interest saved is significant, as auto loan interest can add up to several thousand or even tens of thousands of yuan. Putting that money aside for emergencies or savings gives more peace of mind. With the current economic instability, having cash on hand is crucial in case of job loss or illness. Besides, cars depreciate quickly—after five years, they might only be worth half their original price. Why add the stress of debt? Monthly payments are annoying, and missing one could hurt your credit score, affecting future home loans. Unless there's an urgent need or investment opportunity, I insist on paying in full. Don’t underestimate this expense—it’s a major financial decision, and choosing wrong could lead to regret. Save up more before buying to ensure long-term stability.
Financing a car purchase is smarter, especially for those with investment knowledge. Keeping cash for investing in stocks or funds can earn back the interest. For example, the money I save each month by not paying upfront can be invested in a stable fund, with returns potentially exceeding loan costs. A car is just a tool, not an asset, so there's no need to deplete savings. Installment payments offer budget flexibility, keeping cash on hand for emergencies like repairs or trips. Plus, with high inflation, money is more valuable now, making the actual repayment amount lower over time. However, ensure stable monthly income and keep repayments within one-third of your budget to avoid financial stress. Compare bank interest rates and opt for low-rate products for long-term savings.
