Is It Better to Pay for a Car With Cash or Financing?

So, you’re in the market for a new or used car, and you’ve got yourself wondering whether paying in cash or taking out a loan is a better option. We’re here to tell you that paying with cash might not always be the best idea, so when you’re choosing between the two options, it’s important to consider what’s going to work with your financial situation. We’ll help you decide! 

Reasons to Pay Cash for Your Car

Many people choose to pay for a car with cash because then they will not be paying any interest. When you pay with cash, you simply hand them the amount agreed upon and drive home. However, there are reasons that make financing a car the better choice. You might want to pay for your new car with cash if:

• You do not qualify for a low interest rate
• You don’t trust yourself to make monthly payments on time
• The car is relatively inexpensive

Reasons to Finance Your Car

If you are buying a new car, one that is going to cost a decent chunk of change, you might want to strongly consider the convenience and advantages of financing. Many people can afford a nicer car through financing, rather than only buying the vehicle you can afford in cash on the spot. Making monthly payments can be tough or annoying for those with a tighter budget, but ending up with a more reliable vehicle might be worth the investment.

Read More: Tips for Financing a New Car With Poor Credit

If you have a decent credit score, you can potentially qualify for a low interest rate. A lower interest rate means that even after all those monthly payments, you will have paid much less in interest on top of it. If you have the room for close to a 20% down payment and qualify for a lower interest rate, it might make the most sense for you to choose a financing plan.

Apply for Financing Pre-Approval Online

If you are interested in seeing what kind of financing plan you qualify for, here at Palmen Dodge Chrysler Jeep Ram of Racine, fill out the online credit pre-approval form. Our financing team will work with you to choose the plan that best fits your budget and your lifestyle, and help you drive home in a great new or used car.