The thought of purchasing a vehicle is always accompanied by some big decisions that need to be made, such as, “should I pay using cash or another method?” Both options have its advantages and drawbacks, so we’ll explore each option thoroughly to hopefully aid in your decision-making.
One of the biggest advantages on cash payments is the opportunity to forego interest on payments. A lot of buyers rack up hundreds and thousands of dollars in interest overtime when paying off their car. You can avoid this by having all your cash up front! A downside of this, though, is that most car dealerships prefer financing options and the existence of a paper trail (that protects both you and their company).
Paying cash upfront allows you to own the car outright! Once the vehicle is purchased, it’s entirely yours with no accumulated debt dragging behind you. Unfortunately, buying a new or used car cash rids you of the opportunity to build your credit history- and having a great credit score overflows into other financing aspects in your life.
A full cash payment means that you spend exactly what you can afford and nothing more. However, because of this, you may miss the opportunity the company might offer for low interest rates. Dealerships sometimes offer significant rebates if their buyer finances their vehicle through an institution partnered with the automaker.
Before making a decision, weigh all the benefits and risks to ensure you’re comfortable with your choice moving forward!