If you need a reliable car or motorcycle to get to your job and you don't have a lot of money in the bank, a secured installment loan to purchase a vehicle is often your only reasonable option. But even if you have enough money to buy a new car or other expensive object outright, taking out an installment loan to cover part of the purchase cost can still make sense. Before you finalize a major purpose, see if any of these three reasons to get an installment loan rings true to you, even if you have a lot of cash on hand.
You Can Keep a Lush Emergency Fund with the Cash Left Over
Especially if your current health and auto insurance policies aren't the best that are available on the market, keeping an emergency fund that you can tap into in a moment's notice will bring you immeasurable peace of mind. The larger the emergency fund is, the more you'll be able to rely on it through short to moderate stints of unemployment in addition to unexpected expenses.
Maybe you think that you might as well forgo an installment loan and plan on maxing out a credit card if you ever find yourself in a financial emergency. But if the worst happens, dealing with a loan that has an unnecessarily high interest rate won't be fun.
You Can Invest Some of the Money for a Higher Return Than the Loan Interest
Even if you have an adequate but not outstanding credit score, getting a secured installment loan with a substantially lower interest rate than what you can accrue with an index or mutual fund is often a viable option. And the better your starting credit score is, the more that this is true for an unsecured installment loan, as well.
For example, say that you have $50,000 on hand in a savings account and you want to buy a yacht that's worth $40,000. If you only put $20,000 down and take out an installment loan to pay for the rest, you can invest $30,000 instead of $10,000 in the stock market. As long as the rest of your finances are in order and you can keep the money in the stock market for a long time, it's very likely to earn you significantly more than the interest you have to pay on the loan.
You Can Improve Your Credit Score
If you're looking to build up a good credit history in the years and decades ahead of you, taking out an installment loan that's big enough to matter but not so big that it will overwhelm your finances is a big help. Make all the payments on time and your credit score will go up. Just make sure the income you get from your job is high enough to prevent credit rating agencies from assuming you took out a bigger loan than you can reasonably afford.
Speak to a representative from Las Vegas Finance for further information about installment loans.