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Should I finance a car with a warranty or buy a car with cash?
I need a car to get to my job, but I don't want to add more debt to do so. I have $6,000 saved to buy a car with, which I'll probably spend about $5,000 and save $1,000 as an emergency repair fund. My father thinks I should get a certified pre-owned vehicle that's $12,000, pay half in cash and finance the rest. Which is the better option?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Your dad is looking out for your safety and to prevent you from a total loss should your car fail on you. That said, paying cash for a car instead of having a car loan is a savvy financial move.
If you can find a reliable car with great consumer reviews for reliability, by all means, pay cash for the car. On the other hand, an
extended warranty
on a certified pre-owned vehicle is attractive. However, one thing your dad may have overlooked is that you’re going to need full coverage
car insurance
on that vehicle. That could cost you as much as $500 a month based on your age alone. While full coverage is expensive, there are ways to save. Using the free
Jerry
app can help you find the best deals on car insurance. Jerry compares rates from the top 50 companies and delivers the best deals to your phone in minutes.So while there are both pros and cons, paying cash for a car is always sound advice, as long as it’s best for your needs and finances.”
View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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