Should you get a car loan?

For most people, getting a car on their eighteenth birthday is the ideal. While few people can get a car gift on their eighteenth birthday or have been able to save enough money to buy a car either from working or generous gifts from parents and uncles. However, since only very few people are this lucky, most others will have to wait for some years before they can get their first car. At some point, they might want to consider if they should get a car loan. This article will discuss when it is wise to get a car loan and when it will be best to forget about getting a car loan.

When getting a car loan becomes necessary
Here are some of the scenarios that getting a car loan might be necessary.

It will be cheaper for you to move around with a car
If the nature of your job or daily activities require you to move around a lot, it might become cheaper to own a car than to keep using public transport and renting cars. Once you notice that you can save a substantial sum by having a car compared to when you do not have a car, you could opt for a car loan. The money you save from using your car could go into servicing the car loan. This will be great if the money you are saving is covering at least 50 per cent of the amount you are repaying within the period.

Having a car will fetch you more money
Having a car makes it easier to move around. Imagine that you have to make calls on houses and you are paid based on the number of calls you can achieve per day, week or month. You might have observed that going with public transport significantly reduces how much calls you can achieve. You might want to invest in a car knowing that with the car, you will be able to earn more money. It would be great if the extra money you will make from buying a car will cover the loan repayment within that period at the very least. This will make it a great and profitable decision for you to get a loan to buy a car. You can find car loan companies to get a car loan that you will be expected to pay back over a period that could span years. This would make it easy and convenient to pay back the loan.

You have sustainable skills and/or a job that can conveniently offset the bill
It is also not a bad idea to get a car loan if you know that your skills and/or your job is sustainable and you can easily pay off the debt from your income without getting stressed up. In this case, it would be best if the amount you are paying to offset the bill of the car is less than 20 per cent or at the most 30 per cent of your income. This is especially if you can live comfortably on 50 per cent of your salary and then you will still be able to have at least 20 per cent left that you can put into savings and investments.

Instances where getting a car loan is not necessary
Some of the instances where getting a car loan is not necessary are discussed below.

When you know you don’t have a sure proof plan of paying back
If you know that you do not have a sure proof means of paying back the car loan, it would not be necessary to get the loan. If you were taking a loan for your health or other vital needs, it would be better. However, when it is for a car that could be considered a luxury and that there are many great and cheap alternatives to move around quickly, it would not be a very good idea.

When it is of no benefit to you
If you cannot conveniently pay back the loan and the car is not going to benefit you, then you will be losing on both sides. In the end, you could lose both the car and your credit ratings among others. Hence, when the car will not benefit you at that moment, you might want to forget about a car loan and work towards getting a car. You should remember that the car loan will come with interest as opposed to when you save to get a car.