Should I pay cash or take out a car loan for a commuter car?

I have cash for a new car up to $7,000, but I was thinking of maybe taking out a loan and using the $7,000 simply as a down payment. I don't really want a car payment, but I need a reliable car for commuting. Should I pay cash or should I take out a car loan?

“If you aren’t keen on a car payment, cash is ideal.
In general, $7,000 cash will get you a pretty reliable car. It may not have the bells and whistles of a car that’s twice as expensive, but if you only need to commute, this should get the job done.
If you were to get a loan, you’d also have to pay for additional car insurance coverage per the loan contract. Getting insurance can be a stressful and expensive process, but it doesn’t have to be. Try the free Jerry app to help you compare rates from the top 50 companies and get the best deals delivered to your phone in minutes.
While you could get a loan, the idea of paying cash is probably a much better option in terms of financial savviness and avoiding depreciation.”
Eric Schad
Answered on Aug 10, 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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