Overhaulin' - When buying a new car do I really need a car loan?

When buying a new car do I really need a car loan?

I have more than enough for the due at signing, fees, etc, and several monthly payments but not the full amount for the car itself. Also, I'm a new driver and have to get my own insurance: do I need to walk in with an insurance company already backing me?

Public Comments

Unless you have all the money needed for the car, then yes, you need a loan. Can you go to the grocery store and get $100 worth of groceries with $20? I think not. You must call the insurance company as soon as you sign the papers so you have insurance when you drive off the lot.
Even if you could afford to buy the whole car outright, there are advantages of taking out a car loan. The main advantage is that a responsible monthly payments on a decent sized loan looks especially good on your credit report and raises your credit score substantially. It's proof that you are indeed capable of being an adult, financially. This comes in handy later for mortgage paperwork, background checks, and credit checks for things like leasing an apartment. The better your credit score, the less interest they will charge you on future loans too, which is a huge plus. If you are able to pay even more than required per month on your loan, even better -- you pay it of more quickly, but you get the benefit of having a solid loan in your history, which is worth it. As for insurance: Feel free to sign the papers without insurance, but the dealer won’t let you take a new car home without some proof of coverage. You don’t need coverage for the specific car, just proof of an active policy from a trade-in or other car that will be updated to cover the new car. The pre-existing coverage will insure your new car for a set time -- 30 days, for example. If you don’t have pre-existing coverage, you’ll need to contact an insurance company before the purchase and let them know what kind of car you’re looking at. You’ll need to have some idea of what car you plan to purchase (price range, midsize car, truck, etc.) but you probably won’t need the specifics, like model year or vehicle identification number, immediately. They’ll be able to provide temporary coverage until a formal policy is accepted.
It should really save you some money to just get an auto loan estimate on the web to see what todays rates are. You might be pleasantly happy. Also if your credit is not the best, a lot of online loaners are more willing to help you. What I most often tell folks is that an internet quote at http://auto.deal4-you.com is worthwhile.
In order to take delivery of the new car you have to pay it off in full. So you either need to pay cash for the entire amount of the car or secure a loan in which the bank will pay for the car and then you'll owe the bank monthly payments. Insurance will come after you buy the car.
If you can't pay the full purchase price in cash, you are going to need a loan. No dealer is going to let you drive off the lot after only paying the fees and a few payments.
I would say that if you have enough cash to cover all the expenses of new car,then by all means go for it. But I would explore all my options before giving up that much cash. You could also build your credit history by having a car loan. Check out this website for more information. http://www.find-cheap-used-cars.com/used/used-car-loan.php
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