Buying your dream car is fascinating if you have enough money to pay upfront. If you have saved for your favorite vehicle, you can avoid the monthly expenditure of auto loan payments. If you are thinking of making an automobile purchase with cash, even though there are many loan quotes available to you, you may end up spending your savings.
How to decide whether to pay through Cash or apply for Auto Financing?
Having a bank balance and a desire to spend all your cash reserves for buying the car is not enough to settle on the decision. You should evaluate the pros and cons of your decision. Although car dealers offer you amazing cash discounts, the decision also leads to depleting your bank balance to an extent. So, consider your current financial condition and future expenditure before making any decision.
What to do if you are buying a Car with Cash?
After analyzing all the options available and researching the market, if you have decided upon paying for your car with cash, make sure to follow a few tips:
1. Negotiate well for the Best Deal
While negotiating for the final car price, do not mention in the beginning that you will be settling the deal with upfront cash. Once the dealer arrives at the final price, you can inform them about it. It will give you a chance to initiate a second negotiation round. This way, you will get your favorite car at the best price.
2. Choose your Mode of Payment
There is no need to provide the lender with bills! Instead of paying paper money, you can write a cash check or choose an ACH transfer to have a record of the deal. No matter what option you choose, make sure you do not slip out any confidential banking details or personal information to the dealer.
3. Get Insurance for your Car
Do not forget to get your car insured at the same time while taking it out from the dealership. Car insurance is a fundamental thing for every vehicle owner. So, never keep it on hold or else, you may end up with massive financial liability.
4. Do the Paperwork
Make sure to complete the final paperwork for your car before driving it away from the dealership lot. Ensure to take your registration, tags, and other details from the dealer.
Car Buying with Cash: Is it the Right Decision for you?
Before making the decision, the first thing that you should do is check the investment options and the auto loan quotes available to you.
For example, you have $20,000 to buy a car. On the other hand, you can get a three-year car loan at a 2% interest rate with a $5000 down payment. What option will you choose? Calculate the opportunity cost of investing your money vs. spending it on buying a vehicle. It will help you to make a decision.
Also, remember that a new car comes with its own set of costs and charges such as parking fees, gas, and maintenance. All the different costs will impact your monthly expenses in the future. So, do not forget to consider your financial situation before deciding. Buying a car with upfront cash or financing it with an auto loan is a personal choice you need to make. But make sure to evaluate the opportunity costs and do thorough market research before arriving at any decision.