There are two main ways to buy a car. You could buy one with an upfront cash payment and have it paid off or you can make payments on it. There are pros and cons with either method, but today I’m going to list some of the benefits of buying a car with cash.
Negotiation
When you have cash on hand you hold negotiating power. You are the one in control. The people at the car dealership are aware that you are serious when you come in with cash. They know if you don’t get the deal you want, you’ll just go somewhere else.
Your purchase of the vehicle is not contingent on obtaining the loan. This means that you will negotiate on the price of the car and not on the terms of the loan. So if you buy a car with cash, you’re in a better position to get a better price.
Interest
By paying for your car in full, you are saving hundreds of dollars in future interest payments. Interest is money that adds no value to your car. Paying interest is like throwing money away.
When you don’t pay for your car in full, you will have to worry about making payments every single month for the next 3-5 years. If you miss a few payments, you risk losing your car due to repossession.
Finally, by paying interest, the far is not truly yours until you are done paying it. That means that if you want to sell the car you’ll have to pay your loan off first. Thus you might not have any money left over after the sale. When you already own your car outright, you can use the money from the sale on your next car.
An Ethernity Internet
2 responses so far ↓
David Bristol // September 20, 2011 at 1:16 am |
I absolutely abhor paying any interest so I make sure to buy all my cars in cash. Sure, I don’t get a shiny new one, but I only need them to take me from point A to point B anyway.
admin // September 21, 2011 at 2:40 pm |
That’s a good way to do it.