Pay for a car in full, or do monthly payments?
I weighed my options to either pay for a car in full, or pay a certain amount and pay off the rest via payments. Which would be better?
31-35, M
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Adogslife · 61-69, M
@iamnikki If you total your car, the insurance company is responsible for replacing it with one of equal value.
Your risk is paying for a note for a long time. Initially, the car depreciates faster than you can pay it off. The insurance proceeds from a total loss could be less than you owe on the car. Then, the insurance company gives the cash to the lien holder, and you still owe the remainder of the unpaid loan balance. If this scenario is a concern of yours, you can purchase “gap” insurance. It will payoff any outstanding loan balance in the case of a total loss.
Your risk is paying for a note for a long time. Initially, the car depreciates faster than you can pay it off. The insurance proceeds from a total loss could be less than you owe on the car. Then, the insurance company gives the cash to the lien holder, and you still owe the remainder of the unpaid loan balance. If this scenario is a concern of yours, you can purchase “gap” insurance. It will payoff any outstanding loan balance in the case of a total loss.
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