What are the differences between buying a car in full payment and with a loan?
4 Answers
The differences between buying a car in full payment and with a loan are as follows: 1. Different payment methods. When buying a car in full payment, the entire car price is paid to the 4S store at once, and then the vehicle purchase invoice is issued. However, when buying a car with a loan, you only need to pay a part of the car's base price. The specific amount depends on the proportion you want to pay, usually a 30% down payment, and now the minimum can be as low as 10%. The remaining amount is paid through installments. It's similar to buying a house with a loan, where you deposit money into the bank every month, and it will be automatically deducted. 2. Different required documents. If you buy a car in full payment, generally only an ID card is needed, which is required for issuing the invoice and registering the license plate. However, buying a car with a loan usually requires more documents, typically including an ID card, driver's license, bank card, and sometimes bank statements and proof of residence may be needed if going through a bank.
Here's my take on this. Paying for a car in full means settling the entire amount at once, avoiding debt and monthly loan payments. The biggest advantage is saving tens of thousands in interest and financial service fees, keeping the banks from fleecing you. The downside is it drains your savings, and maintaining liquidity is crucial these days. Like when my family paid cash for a car last year, we got stuck when home renovation funds ran short. It's frustrating when promotion opportunities or good investments come along but you're cash-strapped. Another issue is rapid depreciation - a $30,000 car might only be worth $15,000 after three years, whereas that money could have grown in fixed-term deposits.
The most obvious downside of buying a car on loan is the monthly payment pressure. My colleague just got an installment plan two days ago—30% down payment with the remaining amount spread over five years, adding a rigid 3,500 yuan expense every month. The upside is that it breaks down the car purchase cost into smaller chunks, leaving some cash on hand for emergencies or investments. However, beware of the pitfalls in financial schemes: some offer 0% interest but charge a 6,000 yuan handling fee, while others advertise low monthly payments but end up costing 20,000 yuan more in interest. I strongly recommend using a calculator to tally the total cost before signing any contract, including hidden fees like GPS charges and release fees. Also, the vehicle’s green book (ownership certificate) must be mortgaged to the bank, making it a hassle to sell the car before the loan is fully repaid.
From a risk control perspective, the pitfalls of auto loans mainly lie in two areas. First, insurance companies often require comprehensive coverage. Last year when I took out an auto loan, I was forced to purchase three years of full coverage insurance, which cost me an extra 8,000 yuan in total. Second, defaulting is terrifying - if you miss payments for over three months, your car might get repossessed by tow trucks in the middle of the night. Paying in full avoids these concerns: you can choose your own car insurance, and when funds are tight, the vehicle can still be used as collateral for loans. However, loans do have advantages too. Many brands now offer interest subsidies to premium customers - professionals like civil servants and doctors can qualify for 0% interest loans, making this financing option particularly suitable for these groups to 'get the best deals'.
