Most people do not have enough cash to buy a decent car. However, there are consumers who save their money or maybe have received a large sum of money as an inheritance or a bonus at work. If you are thinking about paying cash for a car, you may be wondering if this the best choice.
The alternative is, of course, to finance or lease a vehicle. There are some advantages to financing such as rebates and leasing is a good option if you don’t drive your car too many miles. There are costs involved that make these less desirable ideas; however, paying cash has some definite pros and cons as well.
Pros of Paying Cash
Paying cash means you will never have a car payment; you won’t be paying interest and will not have to face the prospect of depreciation and being upside down in a loan. It leaves your money free to be invested in another way that might be more lucrative. It also means that if the car breaks down, you will, hopefully, have some money to repair it without having to finance those costs.
Cons of Using Your Savings
If spending your hard-earned bucks to pay for a vehicle cleans out your savings, you might want to consider financing. An emergency fund is always a good idea. Even if you have an overabundance of “dough”, investing can be a risky business and may not yield the profit you are expecting.
There is also the matter of rebates – most rebates are not available if you pay cash. With so many attractive financing options available, financing could very well be the best resort.