When we met Walter, he was on the fence about how to purchase his next car. Aside from his bad credit, he was in a great position. He already had $8,000 saved up for a car, as well as a trade in that was worth almost $1,000.
His issue now was whether to get a car loan or just pay for a lower priced used car in full. He was weary of getting roped into another loan after his credit issues a few years earlier, and had steered clear of any new credit since then. He hadn't really needed it, and had been getting very mixed advice on what he should do next. One friend of his was suggesting that he buy a car in cash outright, while another was recommending a return to the world of credit, which was something Walter wasn't exactly looking forward to.
The Pros of Buying a Car with an Auto Loan
While we could certainly see why Walter wanted to stay debt free, we wanted to provide him with some of the reasons why getting a car loan could be beneficial for him, and not a burden.
By using a portion of that $8,000 with his trade in as a down payment, he could still buy a quality certified pre-owned used car and have a very manageable low monthly payment, even with a short repayment period of 24 months.
And, in the process, he would strengthen his credit. This would help him build the clout he'll need in the future when he needs another car loan, a mortgage, or any other line of credit. In addition to that, he could set aside a portion money he'd saved and put it in a savings or investment account.
The Cons of Thinking in the Short Term
If Walter went ahead and bought a car with all of his savings, he would certainly be free and clear of any debt, but his future possibilities would be extremely limited by a thin credit history.
When we discussed these options with him, it really opened his eyes to the positive change that would come with establishing his credit. From there, he decided that he wanted to proceed with the car dealer we had found for him. In the same day, he was able to drive off the lot in a great quality car with money to spare.
If you're wondering what to do with that saved up money and need a car, come to the team here at Auto Credit Express. We helped Walter, and we can help you too. All you need to do is fill out our quick, easy and obligation free online auto financing application. From there, we will connect you with the dealer that is best suited to your needs.