Should I Use a Payday Loan as an Auto Loan?
I'm in the Market for a New Car, Should I Take Out a Payday Loan?
For many reasons, using a payday loan as an auto loan is not recommendable in most cases. If you absolutely must have a car right away and only need a couple hundred dollars, which you know you'll have at your next paycheck, you could possibly take out a payday loan to buy a car. However, I, and most people, would highly advise against doing so as there are many different types of loans that would better suit you. Using a payday loan as an auto loan just does not make much sense financially. Payday loans are meant to be a quick convenient fix if you need cash fast, not really a loan to pay off over extended periods of time. When you take out a payday loan, you often leave a post-dated check that the company will take out of your bank account come pay day. If you don't have that money, you may have to take out another payday loan and could find yourself quickly accumulating debt. Substituting a payday loan for an auto loan really only makes sense if you just need a small amount of money from your next check, otherwise you'll be stuck taking out future payday loans to cover yourself.
OK So How Should I Pay for My Car Then?
While it may depend on the type of car you're buying and whether it is new or used, you should probably consider taking out an auto loan to pay for your car. Paying cash may get you the cheapest price on a car, but unless it's under $2000, most people simply do not have nearly enough money saved up and go with the next best option. When you go to a car dealership, you'll find that almost all of them offer financing on any vehicle you purchase. This lets you pay for your car over a much longer period of time, as opposed to payday loans which require you to pay back the loan at your next paycheck. An auto loan can also be much larger than payday loans, which do not usually go any higher than $1500. Like any other loan, there will be a certain amount of interest tacked on to your auto loan, although you may be able to find a deal that has no interest from anywhere between 12-60 months. Even if you need to get a car immediately, most dealerships would have no problem setting up a finance plan and getting your car the same day. Some people may resort to using a payday loan over an auto loan because they have bad credit, but in the past several years many car dealerships have begun offering financing to people no matter how bad their credit may be. If you'd like, you could also take out a loan from your bank or another financial institution, which would probably be advisable over a payday loan. Just keep in mind that payday loans are generally meant for getting your hands on cash quickly, not for making large purchases paid for over extended periods of time.
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