All Cash or Financing a Used Car
Buying a pre-owned car is a big financial decision. There are many buyers who wonder if they should pay all cash or finance a used car. Our team at Val-U-Line® can tell you there is not one specific answer. It all depends on your personal financial situation and your future goals.
In the guide below, you’ll learn more about paying all cash vs. financing a used car, so you can decide which route works best for you. Contact us with any questions!
Buying a Used Car: Cash vs Financing
You have two options when buying a used car: pay all cash or finance it. When you finance a used car, you will make a down payment and a bank or credit union will cover the additional cost. You will then have to pay them back over time until the value of the loan is paid in full.
When you pay cash for a pre-owned car, you will pay for the full value of the vehicle at once. It’s almost like going to the store and handing the cashier a $20 bill to cover the cost of everything you’re buying, but depending on the price of the vehicle, it may be a little more involved than that.
In some cases, you will need to get a cashier’s check if you’re planning on paying cash. That can easily be secured at your bank or credit union. If the price of the car is higher than $10,000, the dealership is required to report it to the IRS, so you may have to fill out some additional paperwork.
When to Pay All Cash for a Used Car
If you’re looking to avoid the financial process, paying all cash is the way to go. You won’t have to check your credit score or examine a plethora of financial options. Best of all, you won’t pay any interest, so you could save money in the long run.
Paying cash also helps you avoid overspending. You will only be able to use the money you have on hand to buy the car, so you will have a more concrete understanding of what vehicles you can make your own.
Paying cash also makes it easier to budget for a pre-owned car. You’ll be able to avoid making monthly payments, so all you have to do is work the one-time cost of the vehicle into your budget. That will make it easier to plan for other expenses down the road.
Should You Finance a Used Car?
Financing is a great option for most drivers. You can keep your savings with you and get behind the wheel of a capable and reliable pre-owned car.
One of the biggest advantages of financing a used car is the options you’ll have. You won’t be limited by the amount of cash you have on hand, so you may be able to spring for that luxury model you’ve always wanted.
In some cases, financing a used car can actually save you money and even help you make money down the road. Financing at a low interest rate could help you get a great return on your investment. It may also help you improve your credit for future financial opportunities.
Know Your Financial Options!
Whether you’re looking to pay all cash or finance a used car, visit one of Val-U-Line®’s nationwide used car dealerships. Our team will help guide you toward the financial decision that’s best for you.