If you are in the market for a new set of wheels or they are new to you, then you have a couple of decisions that you might want to consider. The first one is to take all of your savings out of your bank account and just pay upfront for the car in full. The downside to this is that you are now broke and so if your car needs any essential maintenance, road tax or insurance then you’re going to have to have difficulty getting that money together. The other alternative is to take out a car loan and financing your purchase makes a lot more sense.

The single biggest purchase that you will make in this life is your home and after that, it is your vehicle. It doesn’t matter if you are buying it used or brand-new because if you want to get a decent set of wheels then you need to spend a little bit more money. We have so many outgoings here in Australia every single week and if the mortgage doesn’t have to be paid for, then don’t worry because there will be a bill coming behind that. It makes more sense to look into car loans because you don’t have to have a significant amount of money upfront, if at all and you get to keep your savings in the bank where it belongs.

If you’re still a little bit on the fence and you need a bit more convincing about the benefits of taking a car loan then the following are just some of those.

• You can prioritise safety - If it is your intention to pay for your car in full then it’s likely that you do not have a significant amount of savings put away. This means that you have to buy a car that isn’t your first choice and maybe not even your second. Buying a cheaper car may mean you have to skimp on safety features like front and side airbags and ABS brakes. It makes a lot more sense to finance your loan and then you can buy a quality vehicle because the money is being loaned to you and you can pay it back easily every month.
• It gives you purchasing power - Many people think that cash is king and if you can pay upfront out of your own pocket then it improves your negotiation power. The exact same thing can be said about taking out a car loan because once you have been approved, you have the same purchasing power as someone who is paying in cash and in full. You can negotiate many extras from your car dealer like road tax for the year, a tank full of fuel and many other things.

The other wonderful thing about taking out a car loan is that you can spread your payments out over a certain period of time which is financially comfortable for you. Many lenders understand that everyone receives money at different times of the month and so you can set your date of repayment as well.