Sacramento Area Honda Auto Loans
Although it can be a nice idea to have the vehicle sitting on your driveway all yours and paid for, it's not always practical, possible or even all that desirable for the majority of us when you look at the subject in more detail. If you think an auto loan is only for those who cannot afford the full cost of a new vehicle all in one go, you might need to think again when the facts are examined. Even if you have enough money sitting in your bank account to pay for the vehicle you want to buy, it can still make more sense to take out an auto loan in many cases.
Of course, the main reason for most people to take out an auto loan to buy a vehicle is because they can't really afford to pay out that amount of money all in one go. A loan lets the buyer pay for the vehicle in affordable monthly payments, and plenty of people wouldn't be able to afford to buy if it wasn't for financing being available to them. It also presents the opportunity to get into a better vehicle than if you're having to pay outright. A better, newer vehicle can be nicer to own and drive, but it can also mean greater levels of reliability, which could be crucial if your job or something else depends on you being able to get where you need to be when you need to be there.
Even if there is enough money available at the time, buying a vehicle is a substantial outlay and with the best intentions in the world, very few vehicles are what anyone could call an investment. In fact, the biggest single cost with vehicles over the period of ownership is depreciation, which is the amount of money they devalue by over time. If someone asked you to invest $20,000 in a financial product for a period of three years and you'd get back something like $10,000 at the end, it's not exactly the kind of investment opportunity anyone would jump at.
Of course, taking out an auto loan isn't going to stop your vehicle depreciating, but it does allow you to keep your lump sum safe where it is, or leave it available to be invested in something that will actually make you money. At the very least, financing your vehicle while keeping your money in the bank leaves you covered for when one of those rainy days comes along where an unexpected cost arises you simply cannot avoid.
Leasing a car is an increasingly popular option for funding a new vehicle, but the downside with that option is you're left with nothing at the end of the term. Just like renting a home over buying one with a mortgage; monthly payments made to a mortgage are actually contributing to you owning something, while rent just keeps a roof over your head as long as you keep up with the payments.
Another advantage of an auto loan over a lease is the flexibility a loan offers. At any point during a loan period you are free to sell the car as long as you pay off the outstanding balance on the loan, and you're also free to do as many or as few miles of driving as you want. A lease will always be set at a rate dependent on the total amount of miles to be driven over the term of the agreement, which can be a costly problem if your circumstances change and you need to do more miles than originally agreed.
There's also the ability to refinance a loan at any point to take advantage of lower interest rates or to pay off early if you wish. Unlike a mortgage on a home that is dependent on the current value of the property, and auto loan is only concerned with the outstanding balance, regardless of how much the vehicle is worth.