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The Distinct Advantages and Disadvantages of Auto Loans

The decision to buy a new car is very important for you and your family. You might think of the varied options regarding the taking of an auto loan from any financing firm or a bank. The money is directly transferred to the dealers after all your required documents are processed and ready to go ahead. The next part of the process consists of paying this amount with some percentage of interest added to it. You may also be asked to pay some amount of down payment depending on your credit score.

Advantages:

1) You don’t have to pay the complete sum straightaway. This helps in allowing you to pay in monthly installments.

2) As the times pass your income will go on increasing, which will certainly lessen the burden which is upon your shoulders as the monthly installments are the same.

3) Taking auto loans allow you to save your money for any future mishap.

4) An auto loan helps you to go beyond your budget range while buying a car. You can go for a car of your choice with the help of a suitable auto loan.

Disadvantages:

1) When we take a car loan, it undoubtedly gives us the benefit to pay the sum in monthly instalments, but it also makes us lose out on a lot of money, which is paid as interest.

2) An auto loan also restricts you from going abroad or disposing off your car. The approval of the financier is required for the same.

3) At some point if you feel that you can make a prepayment to clear your loan, you have to face the prepayment charges which might result in losing out even more money.

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