Car Loans

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Car Loans

Car Loans

(Last Updated On: July 24, 2017)

For most people, buying a vehicle in cash, whether used or brand new, isn’t the most practical choice.  Cars are just too expensive to go one time big time on.  Instead of using all your cash on a ride, you probably think it’s much better to use the money to add to your savings.  It also doesn’t help that you have the option to go with car financing or loan.

Car financing seems to be the better option especially if you’re short for cash or have other expenditures on priority.  With its flexible terms and special promos included, it really is an opportunity that will be hard to resist.


Usual Terms

Auto loans are enticing because of the terms it offers prospective car buyers and below are some of the common ones you’ll see if and when you apply for a car loan:

  • Flexible Payment Terms – low down payment or monthly amortization
  • Fast Loan Approval
  • Inclusives – “all in” promos with mortgage, registration and insurance all taken care of


Things You Should Look Out For:


  1. Credit History – just like your typical credit card application, car financing requires a thorough background check and it wouldn’t help to have bad credit history.  If you have outstanding debt, settle them first and establish a savings pattern before you send your application.  You need to look good for you to convince lenders that you are capable of paying for the car until the very end.
  2. Only Buy What You Can Afford – Be realistic and try not to be swayed by dealers into buying something whose payment you cannot sustain for the long term.
  3. Avoid Multiple, Simultaneous Applications – just like with credit cards, multiple rejections makes you look bad so take it one or two applications at a time before you send out another one.
  4. The Longer the Term, The Bigger the Interest –  the idea of extending the loan’s term to several years more may seem beneficial but you have to take note that the longer it gets, the bigger the interest so don’t be swayed by promos like these because you will end up spending more if you bite.
  5. 20% Down Payment – same principle with that of the length of the term.  This time, the bigger the down payment, the less money you spend.
  6. Pay the “Inclusives” in Cash – these “all in” promos can be tempting.  Who wouldn’t want to get all these taxes and registrations be all taken care of?  The catch there is that the payment of these fees are being included in the overall loan amount making it much bigger than when these are paid for in cash.
  7. If You’ve Got Money to Spare, Don’t Go for Refinancing – refinancing a vehicle entails additional fees due to interest.  You’ll end up paying for so much more than the original price in exchange for “flexible” payment terms.  If you have the money to buy one in cash, do it.  It can save you a lot more in the end.


While paying in flexible terms seems beneficial because it’s easier and lighter on the budget, you also have to be smart and think of the long term consequences these flexible terms entails.  Do your research and be thorough before you pull the trigger.  You may end up saving more by not taking everything at face value.


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