In the modern times, the ownership of a car is slowly moving away from being a luxury to a necessity. Ownership of a car comes with a lot of conveniences including privacy, flexibility, independence, and the ability to handle emergencies in real time.
However, not everyone willing to own a car can do it, especially due to financial constrains, especially with the initial cost.
This is why a car loan can be a great option, as you can own a car while paying back the loan and interest. However, not everyone understands the various intricacies of the application process, and one of these is the reasons to provide when applying for one.
Here are some reasons you can give while applying for a car loan:
- Business Travels
You could be a young entrepreneur looking for opportunities, and a car would be of great value and convenience. Also, you could be having several clients who need your service, which would make it hard in continuing to rely on public transport.
However, as you explain this to the lender, make sure you highlight the financial viability of your travels. No lender wants to give out their money if they are not sure of getting it back on regular basis, with an interest.
2. Family Transport
Picture this: You have a family of four (father, mother and two children). If the children are school going, each member of the family will require transport to their place of work/school and back. Public transport could prove expensive for such a family, but owning a car could be a bit cheaper and convenient for all.
For this reason to be acceptable, you however need to prove that your current income can enable you to continue paying for the loan.
3. Building Your Credit History
Credit history represents how good you are at making timely repayments and fulfilling the loan contract . To have a healthy credit history, you will first need to have taken enough loans to represent how good you are at making repayments.
A car loan is less risky since you will not provide your assets as collateral, and if you fail to repay the loan, the lending company will simply repossess the vehicle. You can give companies evidence of how you have repaid some loans in the past and provide them with evidence of constant cash flow, and you will be able to get it.
4. Extra Income
A car is not always meant for personal use. You can use itfor taxi business, or even transporting goods from one place to another during your free time, to earn you extra income apart from your regular job.
The lending company will only want to see proof of constant cash flow so you can repay them at the rate specified in the contract.
5. Work Transport
Some jobs require that you have a private car to ease movement due to the nature of the work. In such instances, the employer will guarantee you to get a car loan that will help you buy one.
Having a job has less perceived risk for the lending company, and they will be more likely to provide you with the funding. Just be sure to provide them with a plan related to your job, alongside the salary you will receive.
This article was adapted from Mwananchi Credit, a financial company offering both logbook loans and car loans.