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.
Is it better to pay cash for a home or finance?
Cash. Paying cash for a home eliminates the need to pay interest on the loan and any closing costs. A cash home purchase also has the flexibility of closing faster (if desired) than one involving loans, which could be attractive to a seller. These benefits to the seller shouldn’t come without a price.
Is buying a car on finance a good idea?
Why Financing a Car is a Good Idea. There is really only one reason you would finance a vehicle instead of buying the vehicle outright. If you are disciplined and actually have the cash saved and have it invested in an interest-bearing account at a much higher rate than the financed amount.
Photo in the article by “Treasury Department”