Should I Buy A Car With Cash Or A Loan In Oakville?
Should I Buy A Car With Cash Or A Loan In Oakville?
Posted on January 29, 2021
If you’re planning to buy a new car in Oakville, you can either use cash or a loan depending on your situation. The answer to this question may seem obvious but there are advantages and disadvantages to both.
Your best option depends entirely on your personal circumstances.
Pros of buying a car with cash
On the surface, buying a car with cash and not using finance makes the best sense. But dig down and the real answer is a little more nuanced.
Pros of buying a car with cash include:
No requirement for a car loan – Not having a car loan means no monthly payments. That means more free cash at the end of the month for other things. It also means no interest payments!
Not having to qualify for a loan – Despite auto loans being more accessible than ever, it can still be a nervous time when you apply for one. You can avoid that altogether if you buy cash.
Not having to manage your credit score – No loan, no credit score concerns. Although you should always keep an eye on your score, there is no immediate need to hit a certain level to buy a car.
Pros of buying a car with an auto loan
There are also benefits to using finance to buy your next car.
Pros of using an auto loan include:
Keep your savings safe – Aside from a down payment, using an auto loan means you can keep your emergency fund for emergencies. You know as well as we do the minute you spend your savings something expensive will happen!
Makes more expensive cars affordable – Splitting a car payment over 36 or 48 months makes a wider range of cars more accessible. Unless you’re fortunate enough to have significant savings, this could be the only way you buy the car you want.
Increases your credit score – If you often utilize credit, having your score boosted by regular payments to an auto loan will help. It will also impact your debt ratio but once you have a few payments made, your score will reflect that.
Buy A Car With Cash Or A Loan – Which is best?
There is no outright winner here as both work best in different circumstances. However, combining cash as a down payment with an auto loan could also work. You can minimize the loan with a healthy down payment and leave cash in savings for emergencies.
Rather than one being better than the other, perhaps a combination of the two might be best!
Contact Unique Chrysler for help, advice and competitive car finance.
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