Would you pay cash for your car or go for an auto loan?

Many consumers prefer an auto loan rather than paying hard cash for a car. This preference is partially because of a competitive auto loan market now offering auto loans on new and used cars, light trucks, sport utility vehicles, and motorcycles.

One obvious advantage of getting an auto loan is that you improve your cash flow by retaining it. Plus you increase your financial security by keeping your money for emergencies or development related expenses such as college tuition or updating your computer equipment. An easy monthly payment over a period of say four years, will make you a person with reliable credit history even if you previously had bad credit.

But let us not get carried away by the benefits of the auto loan. Think for a moment, if you buy your car with cash, you have no monthly payments; and even if you were to invest each month's auto loan payment in an interest paying investment, you would not come out ahead unless the interest rate of your investment is higher than the rate of your auto loan. And we know how likely that proposition is.

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About The Author:

Ego Feathers Jr. is a successful author and publisher of http://www.1st-choice-loans.com. Recommendations and tips on auto loan inquiries including interest rates, bad credit loans, new and used vehicle loans and refinance options.