The common thinking is that buying a car with cash is better than financing because you won’t have to pay interest.
While we agree that buying a car with cash is generally preferable to financing, there are many situations in which that’s not the case.
The best example is if you qualify for a favorable interest rate.
Is it better to pay cash for a car or finance it?
Most people think buying a car with cash is better than financing, simply because you don’t have to pay interest. Generally, if the interest rate you earn on your savings is lower than the after-tax cost of borrowing, paying cash is the way to go. However, you don’t have as many options when you pay with cash.