If you’re shopping for a car, you’ll have a few different options. If you don’t want to buy, you could potentially lease a car. If you would prefer to purchase, you could apply for a car loan, or you could possibly pay for a car in cash. Depending on the type of car you want, the price, and your budget, you might have no choice but to take out a car loan. A lot of people first decide on the exact car they want before figuring out the financial aspects, and while there might not necessarily be anything wrong with car loans, consider the benefits of purchasing a car in cash. You might be faced with the option to use the cash you have saved up as a down payment for a pricier car, or to settle for a less expensive car, but without the car loan. Some advantages of purchasing a car in cash include:
Your credit score is irrelevant
Shopping around and applying for car loans can be a daunting process, and it can be especially frustrating if you don’t have good credit. You might be offered a loan with a high interest rate, large down payment requirement, or you might have difficulties getting approved altogether. By purchasing a car in cash, you take this stressful step out of the equation. You save time, aggravation, and it doesn’t matter whether your credit is poor or great, because you aren’t financing your purchase.
No monthly payments
When you purchase a car in cash, it’s one less bill to worry about. Aside from housing, monthly car payments are sometimes the largest bills that many people have. If you purchase a car in cash, you won’t have to worry about making those payments every month.
No interest, so you’ll save money
Buying a car in cash is generally cheaper. When you finance your purchase, you’ll have to pay interest. It may not seem like much when it’s built into your monthly payment, but over the course of the loan, you pay thousands of dollars more for the car. Save money by purchasing your car in cash instead.
You won’t just save money by purchasing a car in cash because of interest, but there’s a good chance you’ll get a better price on the car overall. Many smaller dealerships and private sellers would rather deal with buyers who can pay in cash, rather than finance the car, because it makes the transaction less complicated overall. If you’re about to buy your car in cash, you can probably get an even better deal on the price than if you were taking out a car loan.
No repossession or credit concerns
People don’t plan to be late on their car payments or miss them completely, but alas, things happen. If you lose your job, for instance, you don’t want to have to worry about how you’ll make your next car payment. If you paid for your car in cash, this won’t be a concern. Otherwise, you have to worry about your credit score dropping. If you fall very far behind on car payments, you’ll also have to worry about it getting repossessed.