seems like any time you can avoid financing is good but someone asked me and I wasnt sure. Seems too good to be true (if you have the cash)
2007-09-21 10:41:15 · 8 answers · asked by sfdj66 2 in Business & Finance ➔ Credit
Auto finance is what I do for a living and a long as you do not need the loan for building your credit paying cash is the way to go. Unless you qualify for 0% then you would be foolish not to finance.
If you elect to do this, do not tell the dealer that you are paying cash or have a trade in until you have their lowest price. We dealers make money by holding points when we do the financing so you will get a better price if they think you are going to finance with them.
After you have told them about your trade and agreed on a difference only tell the Finance Manager that you are paying cash after you get into their office.
2007-09-21 11:24:06 · answer #1 · answered by ? 7 · 1⤊ 0⤋
Kate's answer makes no sense. In most cases the dealer sells your loan within hours of you buying the car. They don't care one way or the other if you still owe payments.
Some would argue financing a car at low interest allows you to keep cash to invest in an investment that gives you higher returns, but typically, people don't come out ahead (for one, they tend NOT to invest because of things like - PAYMENTS due).
At the end of the day, it is not wise to finance a depreciating asset (one that doesn't GAIN in value - like a house typically will). So, no, there really aren't any disadvantages to paying in cash - it's a good idea.
As for building up credit - the best way to "build credit" is to pay all your bills on time. It is silly to finance just for the sake of building credit. When it comes time to prove your credit worthiness (for example, when buying a home with a mortgage) all you need is proof of a steady income and proof of paying all bills on time
2007-09-21 10:51:40 · answer #2 · answered by Bill S 3 · 0⤊ 0⤋
The drawbacks are that the dealerships don't make a commission off of selling you a loan, the credit bureau doesn't get your money for running a credit check, and you are more financially secure so when you lose your job or have an illness the check cashing places aren't making a fortune off of 200% loans.
All kidding aside, you may want to haggle the price on the car without talking about a trade or financing. Some want the commission on the loan - so they may want a higher price.
2007-09-21 10:52:22 · answer #3 · answered by Professional in FL 4 · 1⤊ 0⤋
there is a lot of 0% financing available, which is like paying cash. keep your money in the bank and you'll actually make money by financing with the interest you make of your money. if you finance a vehicle on a rate other than 0%, it is always good to pay cash down or a clear trade-in. that way your payments will be less. if you owe money on your trad-in, wait until the rebates are out on new vehicles at the end of the year. good luck
2007-09-21 10:56:11 · answer #4 · answered by tom 1 · 0⤊ 0⤋
There is a definite disadvantage to lending institutions. There's none to you. There's no difference in warranty or service contracts. There's actually some advantages. With a loan, if the car dies before you're done paying for it you are stuck for the payments. If it's paid for up front. this can never happen. If you are in a collision and your car is totaled, you get the check, not the lending company. This has 2 advantages, if you owe more on a loan than the insurance pays, guess what? You're stuck with paying the rest for a car you can't use. This includes any deductible.
2007-09-21 10:56:15 · answer #5 · answered by ToolManJobber 6 · 0⤊ 0⤋
I would pay cash if i could so their would be no interest payments, but if you have no credit and ever want a credit card then it would be better to finance to build up a good credit history.
2007-09-21 10:50:18 · answer #6 · answered by rem552000 5 · 2⤊ 0⤋
The zero % loans are the best .
But also , monthly payments mean you have more leverage when something goes wrong .
Sadly , human business behavior is to not take you as seriously if you have already given them all the $$$.
If you pay for any major item upfront ,
It is much easier for the seller to dismiss you when you have issues .
I prefer the 0% set ups for as long as they will run them .
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2007-09-21 10:48:24 · answer #7 · answered by kate 7 · 0⤊ 2⤋
sometimes you may get a bigger discount if you pay cash - less paperwork for dealer
2007-09-21 12:15:59 · answer #8 · answered by Anonymous · 0⤊ 0⤋