Many people would like to be able to pay for their car outright as nothing beats the feeling of not having debt hanging over you or having to make a high car payment each month. When you pay in cash, it eliminates the interest and finance costs. There is another good feeling knowing that the car belongs to you and you can do with it as you please. Furthermore, if you want to sell your car then you can do. If you get a car loan the bank will hold the title, which can make the selling process complicated should you wish to get a different car before you have finished paying for the one you have already.
The problem with paying in cash though is that you may clean out all your savings and you may be without cash funds in case of emergencies. When you pay for your car in cash, you are paying for an asset that will lose value over time. You could be using that cash to make you money.
A lot of people decide to pay for their cars through financing. You can get car credit from the car dealer, the bank, credit unions or other financial companies. Some of the best things about car loans are that you free up the money you have to buy other expensive items by using someone else’s money to finance your car purchase.
There are some really impressive car loans out there. These tend to be from the car showroom dealers or the car makers themselves. Some of these deals can be almost the same as if you were paying by cash. Some deals don’t require you to pay any interest at all, something which you don’t tend to find very often.
Of course the car loans available often depend on your credit score. If you have a high credit score then you will not have a problem getting a loan. Should you have a low credit score then car financing can be hard to get. Most people however have a fair to good credit rating and should not have much difficulty getting financing, or may be offered a short loan term at a higher rate of interest.
There are downsides of car loans. They often require a considerable deposit, the monthly repayments may also be considerable, particularly if you have a poor credit history. This will impact your monthly disposable income. Great consideration should be taken before you commit to a series of costly monthly payments.
There is no right or wrong way when deciding on cash or finance when purchasing a car. Everyone has their own preference but the above points should help clarify some points.