Is a car loan a good option?

 A car loan is definitely a good option

Cars are very expensive and it is not easy for everyone to buy them in one shot. So, the loan helps the individual to buy the car, and then he/she can repay the loan in monthly installments which are easier on the pocket than a large sum of money disappearing in one shot.

Typically, car loans are of three to five years tenure but some banks may offer loans for up to seven years, too. A loan for a longer duration may mean smaller equated monthly installments (EMIs), which make the vehicle seems more affordable, but overall, you pay more as interest. It is important to keep in mind that a car is a depreciating asset, so taking a loan for a longer period may not be the best thing to do.

Yes

It’s a good option if you have other financial commitments and cannot afford to pay a lump of money for one particular spend in one month.

But to get the best deal on it you must compare to get the lowest rate of interest from as many banks as possible. Shop around for a while, do thorough research, and finally compare to find the best car loan for your circumstances.

In my case

I had financed my car with HDFC Bank as they offered me flexible repayment plans and easy to use EMI options that helped me get a car within a short period of time.

Do you need or want the car? Can you pay for it in one lump sum in cash or would it make financial sense for you to do so?

There are so many different factors that impact an answer to your question, including how much would you be borrowing and your financial cirumstances and prospects for the term of the loan.

Automobiles are depreciating assets, so one simple answer would be that borrowing money to buy one is not a worthwhile pursuit strictly on that basis.

In the past 15 years, I have only bought used cars that I could pay cash for. The expense of buying transportation on credit is not worth it to me. There are other folks where a new car is an indulgence that they can afford to spend discretionary funds on. They wouldn’t be wrong if they thought it was worth it.