Should you finance your next car with an unsecured loan? To borrow or not to borrow, to paraphrase Shakespeare’s Hamlet. This is a question which many may ponder long and hard before finally coming to a decision but the reality is that a straight yes or no answer is not always possible for everyone. There are often other factors to be taken in to account which will themselves determine the outcome.
The first point of consideration will be when you intend to finance your next car and whether you can afford to pay cash for it or are likely to require an unsecured loan. If the cash is not going to be available and delaying the purchase of the car is not a viable option, applying for an unsecured loan may very well be the only action available. Even if the cash is available, however, this fact alone does not necessarily rule out the unsecured loan.
If cash is available to finance your next car but the act of doing so would completely empty your savings account, with no money left for emergencies, taking an unsecured loan at least for part of the cost of the car may well be a prudent choice. This may be entirely affordable in terms of the monthly repayments and still leave that little rainy day nest egg sitting in the bank. Various calculations will require to be performed in this instance but caution is always advisable.
There may, however, be another form of finance available for your next car in the shape of zero percent finance from the car dealership. These offers are usually only available on new car purchases and come in a variety of forms but can save you a fair amount of money. It may be the case that you repay only part of the value of the car in this way over the term of the agreement and are then liable for a lump sum repayment of the balance at the termination of same but savings can still be made if the required amount is squirreled away each month in order to cover the final cost.
When considering whether you should finance your next car with an unsecured loan, you should consider how your finances are likely to change over the period of the loan. Any perceived, significant changes should be considered and allotted due space in the calculations if a true picture is to be constructed and the right decision ultimately made.