To finance or to purchase outright is one of the first considerations of buying a car. Of course if you don’t have the lump sum available in the bank, finance may be the only practical alternative, but what if you do have ready funds? Are you better off to finance your car anyway?
Whilst the answer will differ, depending on your other financial commitments and your overall financial situation, the below considerations may help crystallise your decision. The main two considerations on whether to use your own money or a lender’s are:
Can the money be used to fund income generating activities? Particularly pertinent for business owners, if the funds are going to be used in the business with the potential to make more money than the cost of the loan, then the economic case is clear and financing the car is the better alternative.
Do you need to regularly upgrade your car? If you want or need to upgrade your car to a newer model every couple of years, considering a lease makes sense as you can expense the car and then easily upgrade at the end of the lease. Talk to your accountant for more information.
The benefits of financing a car are:
- Reserve funds for income generating activities.
- Ability to expense the car through leasing.
- Purchase sooner if you don’t already have the money saved.
- The large variety of finance products on the market today mean finance can be tailored to your circumstances.
For more information contact 123 Carz.