Should You Pay Cash or Finance When Buying Used?
When it comes to buying a used vehicle you’re met with a unique situation when it comes to actually exchanging money for said vehicle. Should you pay cash or finance your used vehicle purchase? Given the high prices of new vehicles you wouldn’t dream of outright buying it with cash, but with the often much lower prices of used vehicles, it’s certainly an option that’s on the table. You may be able to pay in full with cash, but is it the right decision for you? Financing requires less money at initial purchasing time and lets you pay over a fixed schedule but increases the overall cost. Paying outright or financing, which is best? Follow along with us as we outline the pros and cons of each.
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Paying with Cash
Paying with cash for a used vehicle is a straightforward process for those who can afford it, but due to its need for up front money means it’s not for all. A cash payment is cheaper in the long run and makes you the vehicle owner right away, but it does so by taking a big, immediate chunk out of your bank account and limits your purchasing and credit building ability. Observe our cash payment pros and cons below.
Advantages of Paying with Cash
- Pay All at Once: Don’t worry about having to pay each month, and over a long term, since you’ve gotten it all out of the way at once.
- Simple Process: There’s no payment plan to work out, just pay the amount and the used vehicle will be yours without hassle.
- Own the Vehicle Right Away: If you’re financing a vehicle it’s not technically yours until you’ve fully paid it off. By buying it outright the vehicle is yours immediately.
Disadvantages of Paying with Cash
- Lose a Large Chunk of Savings at Once: No matter how much money you have, losing a large chunk of it at one time can be a big deal, especially for emergency situations.
- No Opportunity to Build Credit: Financing a vehicle is the perfect opportunity to build credit, and by buying it outright you lose this chance.
- Limited Yourself on What You Can Purchase: Financing allows you to get a better vehicle than you may have thought, and a cash purchase limits you to what you can afford with your money on-hand.
Financing is the prototypical payment method for used vehicles, but comes with its own list of advantages and disadvantages that may or may not work with your needs. Financing helps you save money right off the bat, but demands you pay off the vehicle each month. Observe our financing pros and cons below.
Advantages of Financing
- Lower Up-Front Cost: You will be able to get a low down payment and require less money up-front, while still driving home in your desired car.
- Build Your Credit Score: Financing a vehicle is a great way to build your credit through an auto loan, providing a terrific route to credit recovery.
- Purchase a Better Vehicle: Cash means a restricted budget, but financing opens up doors for you to get a “better” vehicle since you’ll be spreading out the money over a longer period of time.
Disadvantages of Financing
- Higher Cost: You’ll pay more for the vehicle over time than you would if you used cash, due to things like interest.
- You Don’t Fully Own Your Vehicle: While you’re driving your vehicle it’s not officially your vehicle until you’ve fully paid it off through financing, unlike buying outright.
- Less Flexibility: Financing limits you to a set term and rates depending on what you can realistically afford.
Buy or Finance a Used Vehicle at Davey Auto Sales
When it comes to whether financing or paying with cash is best for your next used vehicle purchase, it all depends on your situation and needs. Depending on what you value out of your vehicle purchase and your own finances makes it quite clear which method is best for you. If you’re still stuck, our team here at Davey Auto Sales can help you make the decision. Either way, financing or cash, our Oshawa dealership is here for your used vehicle needs, with an inventory stocked full of car, pickup, SUV and van models from the top brands. Contact us, today, to start your next purchase.