When buying a car you often think that paying for the car by writing out a check for the entire amount one time would be a smart idea. This essentially means you’ll never have to make a payment, however, this is not necessarily the best idea. In our opinion, buying the car with cash is a better option if you are able to do so and we’ll tell you why!
Cash or Financing?
When it comes to shopping for and buying a car you typically have two options. You can finance the vehicle, or pay it off over time, or you can pay cash for the vehicle, which means you are paying for the car in full one time. When you finance a car you end up getting a better car then when you have to pay for it with cash. This is because, for example, if your car budget is $10,000 you’ll end up buying a used car and paying it in full, but if you use the $10,000 and use it as a down payment on a new car, you have better options. The main drawback, however, is that you’ll have to make monthly payments to pay off the loan to buy your newer, more expensive vehicle.
Is Cash Better?
Typically people perceive buying a car with cash as the better option because you don’t have to pay interest. With a cash deal, you pay exactly the asking price and nothing more. When you finance a vehicle you have to pay off the vehicle with a financial interest and you’ll be ultimately paying an additional amount than the actual price of the car.
There are many options to consider, and your choice depends on your financial circumstance. You should think twice before paying cash or financing your vehicle. Sometime buying a car with cash can be the better option, especially if you find a relatively inexpensive vehicle in great condition, however, it’s best to see what options are out there in terms of a good loan before you make a final decision.