Is there a downside to paying for a car in cash?

"Is there any reason for me to finance a car instead of paying cash? I found a new car with an asking price of $22k. I have the funds in my savings to buy it outright and cannot really think of a reason why I should finance the car instead of just paying cash for it."

Answer provided by
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Johnny Puckett
Answered on Jul 28, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
“There are a few reasons that it would be smarter to finance a car instead of buying it outright:
  • you can finance a car out of range of your cash budget
  • you can save your cash for an emergency fund
  • on time payments can build your credit
You can always later decide that you want out of the loan and pay it off early.
To save money in the long term, consider using your cash savings for a sizeable down payment. If you do decide on financing, also be sure to avoid longer loan terms.”
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