If you’re reading this, then you’ve probably decided it’s time to purchase a new car. Thankfully, there are many ways to buy a car these days, each with their own pros and cons.
There are two very popular options when buying a new car is paying cash for vehicles or getting a car loan and paying off a car over time.
In the following, we will take a look at the advantages and disadvantages of paying cash for cars and getting a car loan to help you make the right choice for yourself.
Paying the Cash
You Get to Pay in a Lump Sum:
Paying Cash for Cars is undoubtedly the fastest way to pay for a car. Through a quick transaction, you can have your new car paid for in a lump sum today in very little time. This is unlike getting a car loan, where you will be paying off your car over months or even years.
You Can Own Your New Car ‘Same Day’:
Not only can you pay for your car in a quick lump sum, you also get the pleasure of being able to drive away with your car the ‘same day’ you contact the car seller. Your new car, paid for in cash, is yours to use as you will. When getting a car loan, you don’t have the pleasure of knowing that your car is yours to keep without further pending fees.
Paying Cash for Cars Can Be Cheaper:
Paying for your car in cash will generally be cheaper than getting a car loan. By paying in one lump sum, you won’t have to pay interest or pay back the company that gave you a car loan.
Paying Cash of Cars is Simple:
Paying Cash for your car will generally be simpler than getting a car loan. Of course, there is the usual paperwork that comes with handing over ownership, but with a simple transaction you can skip the other complexities getting a car loan.
Your Cash is Gone Quickly:
When paying for your car in cash, you submit to departing with a large sum of money in one quick transaction. This can be off-putting to some people who would rather pay for their car little by little.
You Need to Take Time to Save:
It’s not every day that you have enough money to buy a car outright! For most people, this means needing to take time saving up money before you can pay cash for a car.
Your Choices are More Limited to Used or Cheaper Car Models:
Paying Cash for Cars has many benefits, but like we said – few people can buy a new or expensive model with one lump sum. This is why cash buyers are typically Old car buyers as it’s much more viable to buy an old or used car with cash instead of a new one.
Getting a Car Loan
You Don’t Have to Pay All at Once:
Whether your pay all at once or over time can be a positive or a negative however you look at it. With a Car Loan, you get the stability of being able to pay for your car over time and not completely depleting your bank account.
You Have More Choices for the Car You Want to Buy:
By getting a Car Loan and paying for your car over time, you are able to afford more expensive cars as well as new cars. Getting a car loan allows you to drive away with the car you want without having to save up its total cost beforehand.
Getting a Car Loan Improves Your Credit History:
The more you receive a loan and successfully and responsibly pay it back, your credit history is improved and thus aids in your chances of getting future loans in the future.
Getting a Car Loan is More Expensive:
Generally, getting a car loan is more expensive than paying for a car with one cash sum. This is because you have to pay interest, as well as car sellers often selling their car for cheaper if you buy it on the spot.
Ownership Depends on Paying for Your Loan on Time:
By getting a Car Loan, there is a slight sense of instability in regards tothe ownership of your car. This is because, if you don’t pay your lender back on time or consistently, you can lose your car which will be used as collateral for the loan.
Getting a Car Loan is Less Simple:
Although buying a car will always have its fair share of paperwork, getting a loan will take a little more paperwork. Not to mention, a car loan will require checks on your credit history and more. Now that you have a clear understanding of the pros and cons of each option, you can make an informed decision based on which option makes more sense for you.