Used cars tend to cost significantly less than the new or most recent version of that same car. If you buy a used vehicle that is especially far removed from being new, it might even be possible for you to just pay cash to cover the entire price of the vehicle before you drive it off the lot. But even if you can afford to do this, there are a number of reasons why you still might want to look into an auto loan instead. Here are some of the benefits of applying for auto loans when you are looking to buy a used vehicle.
Save That Cash to Use as an Emergency Fund
Sure, you've saved up thousands of dollars and you're ready to withdrawal the money to get the car you want. But what if you could actually hold onto most of that cash? Get yourself an auto loan with a reasonable interest rate and reap the benefits of keeping that cash in your savings account. You'll have the peace of mind of knowing you could technically pay off the loan at any time if you want to, but you'll also have cash on hand to help you out if something else arises. If your used car breaks down and needs a replacement part, it can come out of your cash stash instead of leaving you scrambling to find additional funds.
Boost Your Credit History
Do you have a credit history that is less than ideal? Even if you are typically declined for other types of credit, you should know that it is still possible to be approved for an auto loan in some cases. This is because the car itself can be used as collateral. That means the loan company can possess your vehicle if you don't pay, eliminating their risk. When you make your payments on time, it will boost or improve your credit score and make it more likely that you'll get approved for other types of credit in the future.
Get a Nicer Vehicle
You might have the cash on hand to buy a certain class of used car outright, but what if you want to drive around in style? An auto loan can help you upgrade your options and either get a nicer car or a version of the car you were looking at that includes more premium features and amenities. If you have good credit, why not take advantage of it by obtaining a loan that will allow you to get the kind of car you really want?