Current Events > Is it better to: buy a car in cash or finance one?

(+) Yeah! (+)

Lets say the cash you have on hand is $10,000 and youre looking for a decent used SUV

is it better to put that $10,000 on a down payment for a newer used car or take a gamble on an older used SUV from a small local dealership or craigslist/facebook marketplace?

---

doesn't really matter unless you want to work on your credit.

---

Buying in cash is generally better because when you finance things you pay more due to interest and have extended liabilities. However, there are exceptions if you can get a better deal financing or can't afford to buy something outright.

---

VipaGTS posted...

doesn't really matter unless you want to work on your credit.

it kinda does though if a buyer is concerned about the quality of the car theyre buying

this situation im describing is: buy an older (hopefully decent) SUV for $10,000 and be done with it or put $10,000 on a down payment for a newer car and make payments for a few years

---

Paying outright is always better. No interest, and instant Title ownership of said car.

---

AzNDarkSamurai posted...

it kinda does though if a buyer is concerned about the quality of the car theyre buying

this situation im describing is: buy an older (hopefully decent) SUV for $10,000 and be done with it or put $10,000 on a down payment for a newer car and make payments for a few years

well, then its hard to answer that because we have no info on the hypothetical used car or what it'll be used for. a used car can be just fine.

---

Idk if my dealership was weird, but they said the bank gives the dealership money for each finance. So when a customer came in wanting to pay cash, we would cut them a cheaper price if they decided to finance. Since there was no early payoff fee, we just told people to pay the whole thing off as soon as they wanted.

Not sure how much truth there is in that but thats what I was told when I was working in cars briefly.

---

depends on you, what you want to do. obviously financially it's better to own the car outright, hence buy a used car for cash.

---

AllegraD posted...

Paying outright is always better. No interest, and instant Title ownership of said car.

Not true at all.

In this case if you're looking at a 10k car vs financing a used car, I can get the argument because lending rates are probably a lot higher than new cars.

If you're looking at a 50k car, and you can make monthly payments and get good financing rates, then your money is better invested elsewhere. A 5k down payment and 45k invested will produce more returns than say 1-2% interest rate on financing a new car. Dumping 50k cash into a depreciating asset is not smart when you can put that money elsewhere.

---

Personally I wouldn't trust buying a car off of facebook/craigslist, or one of those small dealers. A happy medium might be springing for a certified used car, maybe a newer model.

---

Go to carfax.com search for a car on your area filter it by price, brand, miles, single owner, no accidents, etc...now the car you want to find has to come used from a BMW, Audi, Lexus dealer. The cars are actually checked well and majority of those owners took care of the cars and are merely upgrading vehicles. The dealers want to get rid of them asap as well.

I bought a Kia Sorento from a BMW dealer 2 years and it hasn't given me any problems. It costs about 9k-10k or so low miles, no accidents and all that stuff.

I think you mentioned you were in Texas. I'm in Houston and I found it. I had about 3-5 options.

I also went to carcomplaints.com which isn't working that way you check what vehicles the most people complain about, the bad experiences with the vehicles they had and stuff from the model car and the year.


---

Cash if you have it. Dealerships hate it since they dont make money on the interest. They might even lose money

---

Also factor in that an older car generally is going to need things replaced sooner than a newer car. They can be money pits.

---

NES4EVER posted...

Not true at all.

In this case if you're looking at a 10k car vs financing a used car, I can get the argument because lending rates are probably a lot higher than new cars.

If you're looking at a 50k car, and you can make monthly payments and get good financing rates, then your money is better invested elsewhere. A 5k down payment and 45k invested will produce more returns than say 1-2% interest rate on financing a new car. Dumping 50k cash into a depreciating asset is not smart when you can put that money elsewhere.

What?

---

It depends on a lot of factors.

It's incredibly dumb to finance or lease a brand new economy car ie- honda civic, but a good idea for a midrange luxury car ie- bmw or audi

Personally I just pay cash and drive older cars that have already depreciated and have a plethora of cheap parts available.

---

AllegraD posted...

What?

OKAAAAYYY!

---

buy a used car from dealership like 2-3 years old.

---

Sounds more like this is a used car vs new car question. Really depends on the particular vehicle you want and what the market looks like for that model.

Best option would be to finance as much as you can for whatever you're purchasing, and put your savings in the stock market. Invested in the market, you're far more likely to make better returns than what you'll pay in interest on a car loan (unless your credit is terrible)


---