Purchasing a car can be a passion for some people while for others, it can be a necessity. Some people prefer to make full cash payment when buying a car, whereas others have to take a car loan. Well, the decision to pay for it in cash or go for a car loan is entirely yours, and subject to your financial condition. Let’s assume that you want to make the full payment for your car in cash, as you have sufficient amount of money available. But, is it right to spend a huge share of your money on purchasing a car rather than having it in your bank account? Whichever mode of payment you choose, it is recommended to opt for the best car insurance in UAE, as it saves you from various unforeseen issues like accidental car damage.
To understand whether you should opt for a car loan or go for full cash payment, you should ask a few questions from yourself:
- Do you require easy emergency funds? There are people who want to have savings in their account for emergencies. If you are one of them, go for a car For their peace of mind, many people prefer to have cash in their bank account and take a loan to pay off in monthly EMIs. Doing this ensures that they have cash with them, which they can use whenever required.
- Is your cash giving you good interest? If the cash you have is lying in the locker of your home without giving you any returns, then why pay interest on the loan? Instead, in such cases, it is advisable to pay that cash to purchase the car and not take the burden of a car loan. If this is not the case and the cash is in your bank account and getting interested, then taking a loan at a low interest rate certainly makes sense.
- Are you able to manage your cash flow? Look closely at your income and your expenditure. If you do not have lump sum amount of cash to pay for your car, taking a car loan becomes your only option. This will help you maintain a good cash flow of all your money. However, you have to arrange the minimum amount of money required for the down payment.
This will help you with the opportunity to pay off your car loan over the time – probably within a period of three to five years. However, while taking a loan, you should be prepared for all unforeseen situations, such as a critical illness or loss of job.
- Do you already have much debt? There are people who have so much debt that there remains no space for them to take any more debt. If the major portion of your salary is going in repaying your debts, then banks also think twice before giving a loan to you.
Therefore, in such a case, the only option you have in order to purchase a car is paying cash.
- Is there any zero percent deal available on a bank loan for cars? Many major banks give various offers on loans on special occasions like Ramadan or other shopping fests. Sometimes, these banks give zero percent deals on car loans for three years. If you get such an option, it will be great. It will save your interest for three years without any need of spending your savings. Try to pay the major portion of your loan during these three years, as the interest rate may be high after three years.
So, ask yourself these questions and make a decision on your own. Sometimes, a loan is the best option while giving cash works the best in the other times. It is advisable that you calculate the total cost of both the options, in case you do not want to regret later,
However, whichever mode of payment you chose to pay for your dream car, one thing that you must keep in your mind is to get the best car insurance policy in UAE. A comprehensive car insurance policy saves you against various unforeseen situations like car theft and damages to name a few. Moreover, it provides garage/agency repairs, third-party insurance, off-road assistance, brake-down assistance, free pickup and drop to the nearest workshop, and optional GCC coverage as well.
Over to you!
When it comes to buying car insurance, you may have several doubts or questions in your mind. However, the only way you can choose the best insurance policy for your car is compare car insurance online and grab the best deal available in the market.