The Benefits of Car Loans
Car buyers have two options when it comes to paying for the vehicle. One can pay in cash upfront or go for loan financing. Although people shy away from car loans, they come with many benefits. This post explores the top advantages of going for a car loan finance option.
You Can Get 100% Financing
The primary benefit of car loans is that you can borrow up to 100% of the car purchase price. Typically, lenders can finance the entire vehicle cost depending on the borrower's needs and credit history. Thus, if you need to buy a car urgently, you do not have to wait until you save all the money or part of it to purchase a vehicle. As long as you can make the monthly payment, car loans are readily available. Notably, you can spend the money you save when you get a car loan on other essential things.
Car loans operating expenses are usually tax-deductible. Thus, you can benefit from tax deductions when purchasing a commercial vehicle through car financing. Typically, the car loan interest, insurance costs, repairs and even regular servicing are business expenses. Therefore, you can file such costs as company expenses during tax returns. However, consult with your accountant to explore the full tax benefits of getting a business vehicle on car loans.
Build Credit History
Financial lenders use credit history to pre-qualify borrowers for financing. In this case, a borrower who has a history of obtaining credit and paying in time is a creditworthy client. Typically, an auto loan reflects on your credit history when opting for car financing. You will get high credit scores provided you make monthly payments on time. As such, you can qualify for more financial loans in the future with a good credit history.
Some people shy away from car loans due to the perception that the cost of borrowing is high. On the contrary, car loans attract lower interest rates than other loans like personal or credit card loans. Primarily, a car loan is a secured loan. Thus, the car acts as the collateral for the loan, meaning the dealer or lender retains the car title until one pays up for the loan. Therefore, the lenders apply low-interest rates due to car security. Again, most car loans have a long term repayment period, which also explains the low rates.
Ultimately, the car finance option allows you to get a vehicle instantly at low rates and enjoy tax and credit history benefits. Talk with your local car dealer and explore the full benefits of car loans.