Overhaulin'

Is it better to buy a car cash or finance it?

Let's say i have the money to buy a new car, a honda for example. Is it better to buy it cash or finance it?

Public Comments

1. Well if you have the cash for a car that is definitely better but in most cases people don't have the money so they fiance it. By financing you are actually paying more for the car. You paying the car off but also paying interest. If you pay cash you are only paying that amount and then you own it. Cash is always better than financing not matter what you are buying.
2. I disagree with Mike. If you can buy a new car at %0, I say finance it. Most manufactures are offering 0% If you buy a new vehicle at 0% and finance it and lets assume it's a $20,000 car, reinvest the $20,000 in the same length of term of your auto finance contract in lets say a 3 year CD and get 4% a year, you would have gained $2,249.28 If you can not get less than 2% interest, then pay cash.
3. There are many things to consider when making a decision like this. Paying cash for a new car will leave you short of funds in your bank that you might want to buy other things with, however, your car will cost you a lot less if you don't have to pay any interest on a Finance Contract. Your Insurance on the car will be less too if you pay cash, as most Insurance Companies charge a higher premium for cars under finance. If you decide to sell the vehicle earlier than the term of the Finance Contract, owning it outright will be much less of a hassle. Also, Car Dealerships are more likely to give you a better deal if you offer cash at the time of purchase. On the other hand, Financing - providing you make your payments on time, will give you a good Credit Rating for any future loans you may wish to take out. Depending on your age, financial status and probable future commitments for the next (say) 4 years, should also be considered. It's also beneficial if you are using the vehicle for business purposes as the interest you pay on the Contract can be fully off set against your income.
4. Cash, because financing you're going to have to pay extra so the company can make money. like for example an 18 Grand car, you might end up paying 20 Grand, that's how company runs. My dad did this and he made a huge mistake by doing so. And for honda's good luck because Honda are the most Japanese expensive cars for some reason. More expensive then a Toyota or a Nissan. Good Luck!