Car loans can be a plausible thing in life if handled properly but could easily turn into a lifelong mistake if not taken care of properly. But what could be the consequences that often get undiscussed? Keep reading to find out more.
One of the most obvious drawbacks is paying privilege over the loan you have taken from the bank; not just on car loans but on any type of loan. It’s like you are buying money by paying extra money for money. Even after the fixed default rate of interest, the total money that you are going to pay back might be more than calculated.
If you opt for a variable interest rate loan, the interest rates might change. Might increase or decrease depending on the situation. If you want to pay off the loan ahead of your schedule, the bank might penalize you on that too.
Another problem with having a loan is defaulting- not paying your loan in time might result in seizing your car as a whole.
But at the end of the day, even if you manage to repay the loan, your car might lose value being within the loan term.
Verdict; should you actually consider a car loan
Depends on the situation you are in. car loans are not just bad sure there are consequences to be aware of beforehand but bank loans do increase your credit profile which has various advantages in financing in general. Thus, to stay safe, make sure to read the terms and conditions related to your car loan to avoid getting bucked in the long run.