If you are planning on buying a car, then you need to have some idea of where you are going to get the money to pay for it. Those that anticipate the prospect of buying a car using cash usually prepare by setting some money aside to fund their purchase. A large number of other people, however, typically turn to financiers and auto loans to support their purchases. There are clear advantages and disadvantages of paying cash upfront for a car today. To guarantee that you are making the best decision, here are some pros and cons of buying a car with cash:
Advantages of paying for cash
Simplicity
Cash is one of the best and most straightforward ways to pay for a car. At face value, you can be sure that it is the cheapest option- you pay the sum that has been agreed upon. Furthermore, once you pay cash, you will not have to worry about maintaining monthly loan payments.
Flexibility
Paying cash for a car automatically means that you will have full ownership of the car to use as you please. Should you find a better model along the line, you can trade up your car or even offload it and use that money to upgrade to a new one. If you opt to finance your car instead, the credit facility, bank or lender will own the car until you complete all your payments.
Flexibility on insurance
When you own a new car outright, you have the complete power to decide what type of insurance you want to invest in. If you can only afford a lesser amount of coverage, you can make the decision to select a cheaper package to save money.
Cons of buying a car with cash
Cash is not always available
There are plenty of people that would prefer to pay cash for their car. However, the total amount of money that is required all at once is often hard to come by unless you have been saving for a long time. Although you can always try and put off your purchase until later, this is not always possible. As such, opting for a cheap car that has been paid for by financing might be the only alternative.
It is not always the smartest idea
You do not want to pay cash for your new car especially if the money can be used in other areas such as home improvement. Before you decide to pay cash for a car, be sure to assess all your needs first to determine if you are making the best decision for you and your future.
A limited selection
If you decide to go ahead and pay cash for your car, you might only have a limited selection to choose from. Depending on what your budget will be, you might only be able to afford a specific car, but not the car of your dreams. Therefore, if you have a specific car in mind, sometimes it makes sense to turn to loan options available so that you can top up the amount that you already have.