Car is a necessity, though expensive investment. New car depreciates by 20-30 percent annually, prompting consumers to have second thoughts on buying one. At the same time, purchasing a used car is a difficult decision. You need to ensure it has no serious problems, needing a lot of money for repairs, in which case you’ll end up paying more than it’s worth. If you decide to go for a used car, the next question is of its financing.
In the absence of adequate savings, you have no option but to ask for a loan. If the rate of interest is low, paying interest on the loan may be less than what you may be earning from the funds invested elsewhere. In such a scenario, it makes better sense to borrow even if you can afford to finance it.