Financing vs. Paying Cash – Navigating the Road to Your Next Used Vehicle Purchase

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When you’re ready to purchase a used vehicle, one of the first decisions you’ll face is how to pay for it. You have two options: paying for the vehicle upfront or financing it over time. In this blog post, we’ll dive into the benefits of financing versus paying cash. Our goal? Helping you decide which is right for you.


Financing a vehicle means that you will pay over time, somewhere between 24-72 months. This approach spreads the cost over multiple years, and in most cases, doesn’t require a large sum of money down. Financing makes purchasing a vehicle much more manageable for many buyers.

This option allows you to keep your savings around for other essential expenses as you pay off the vehicle. Another benefit to financing is helping build up your credit score, as you routinely and reliably make your payments month after month.

When it comes to financing, there are three significant factors to consider:

  • The loan amount (the total amount you’re borrowing to get the vehicle).
  • The annual percentage rate (also known as the APR, which is the interest rate you’ll pay on your loan).
  • The loan term (the amount of time you’re taking to pay back the loan amount).

Consider this, compared to paying cash for your vehicle, financing can allow more flexibility.  How? Well, it comes down to interest rates and opportunity costs. When you pay cash, you’re giving up the opportunity to invest that money elsewhere, but when you finance your vehicle, you keep the bulk of your cash available for other investments.  But, even if you have the cash to pay in full, it can still be beneficial for you to finance your vehicle.  It can help build your credit score, and with a favorable investment elsewhere, possibly your bank account, too.

Choosing What’s Best for You

Ultimately, the decision between paying cash and financing your next vehicle depends on your individual circumstances. If you have sufficient savings and prefer not to take on debt, paying cash may be the right choice.

However, if you’d rather keep your cash for other purposes and have a steady income to cover monthly payments, financing may be a better option.

Ultimately, the key to making your decision is to carefully assess your own financial situation, understand the terms of any financing contract you may agree to, and budget to make sure that regardless of how you pay for your vehicle, you’ll be in a safe place financially after your purchase.

This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial or other advice.

To learn more about vehicle financing, please contact your dealership for current terms and conditions.

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