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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."
Johnny Puckett · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“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
.”View full answer
- Gregory R.
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