Should You Buy a Car With Cash? Helping You Decide

Should You Buy a Car With Cash? Helping You Decide

Posted on August 2, 2023

If you buy a car with cash, it sure has benefits but may not be the perfect option for your situation. Auto loans in Paris may be a financial burden but they can also help out in certain situations.

This is another of those questions we cannot answer directly as too much depends on your personal situation. Instead, we’ll offer some guidance on the pros and cons of buying a car with cash so you can make a more informed decision.

Pros of Buying a Car With Cash

You’re free and clear: As long as you won’t empty your savings, buying a car with cash means a one-off transaction with no ongoing commitment.

The car is yours. You have no finance secured on it. You have no extra outgoings each month except the running costs for the car. If you like life simple, paying cash can make a huge difference.

Helps you budget: If you have finite savings, you have a finite budget. You have no opportunity to overspend or you have more impetus to stick to your budget.

You’ll likely already know how easy it is to overspend in a dealership and this is another way to avoid that.

If you have more savings than you’re allocating to your car, you may still require willpower to stay on budget but you can overcome that by moving your car funds to a different account so that’s all you have available at the time.

No interest to pay: Car loans are convenient but they can be expensive. We do secure the cheapest possible car loans but you’ll pay interest regardless of the rate we can secure.

That’s money that doesn’t pay for anything and is essentially money down the drain for you.

You don’t have to worry about qualifying or credit scores: Qualifying for a car loan in is easier than ever, as is the paperwork involved but it’s still a burden. It’s still something you need to worry about and prepare for.

Even when applying online, you’ll still need to check your credit, prepare bank statements and justify yourself to a lender. You don’t have any of that when paying cash.

Cons of Buying a Car With Cash

Drains your savings: Unless you’re very lucky, paying cash for your next car is going to significantly drain your savings.

You know full well that if you empty your accounts, it will be just afterwards that an emergency will occur or you’ll need emergency funds.

If you qualify for a low rate: While savings rates aren’t great right now, if you’ll pay lower interest on a loan than you’ll get for savings, it can actually work out cheaper to borrow.

If you have investments or fixed term savings with decent rates, you may actually save money by getting a low car loan rate.

Helps build credit: If you think you’ll need credit at some point, successfully servicing a car loan in Paris will help build your credit score.

A payment history full of car loan payments can work wonders for future borrowing and is a surefire way to help increase your credit score.

If you’re planning a mortgage or something else later in life, a car loan can help pave the way.

As you can see, there is no right or wrong here. Everything depends on your personal situation, how much you have in savings and the interest rates you’ll get.

If you're ready for a car loan in Southern Ontario, we'd love to help! simply fill in the form below to get started.