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?

Answer
“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.”
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Eric Schad
Answered on Aug 02, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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