automotive finance

Is it better to buy a car with Financing or with Cash?


When it comes to buying a new vehicle, this can be a huge responsibility as there are a lot of things that you need to account for, which includes how you are going to pay for it. That being said, interested car buyers have two basic options to pay for their brand-new vehicle. They can either pay with cash for their new car or they can get a financial plan for it. With that in mind, we break down everything you need to know so you can decide which option will suit you best.


a man getting a cash on his wallet

Going with cash as a payment option is the most simple and straightforward method of paying for a vehicle. Paying with cash saves you from the interest rates that come with car financing and the added burden of that interest. The added interest will not only put a strain on your monthly income but will also add extra cost to the total price of the vehicle. That being said, there are a lot of pros that come with buying a vehicle through cash, however, there are still a couple of cons that you need to be aware of as these could be missed opportunities.


Here are a couple of pros you can expect to encounter when you pay with cash. Cash is often the preferred method of payment to make a large purchase because it doesn’t leave you in debt and you get to own the vehicle immediately. 

✅ You don’t have to worry about the extra monthly expenses.

✅ You don’t owe the bank any money, as you have already paid for the vehicle in full. 

✅ Once paid, the vehicle is automatically yours no questions asked, and no need to pay other fees aside from preventative maintenance.

✅ You automatically have the option to sell without having to go through the bank. 

✅ One time payment


❌ It won’t help build up your credit score. Paying for a vehicle through financing will help you build up your credit score and will help you get lower interest rates later on if you pay for the monthly expenses early or on time. 

❌ Consider the depreciation of the vehicle. Once your brand new car gets released to you it automatically depreciates. The more your drive your vehicle the more it will go down in price. That said don’t expect to be able to sell it for the same amount of money that you bought it. 

❌ Buying a brand new car with cash is a big payment, as such, it might be difficult to recuperate the cost of the vehicle.

❌ Your vehicle options are limited by the amount of money that you have saved up. This limits your ability to buy other higher-priced vehicles if your savings don’t match the standard retail price of the vehicle you want.


When it comes to financing a vehicle, this is one of the most flexible payment options. There are a lot of ways to financing a vehicle, these include a Personal Contract Purchase (PCP), Hire Purchase (HP), leasing, personal loan, or through a credit card payment. Each of these options comes with its own distinct advantages and disadvantages.  The pros and cons listed below do not focus on any specific type of financing, however, it will give you a general idea of what to expect.


Paying a vehicle through financing opens up a world of opportunities to the car buyer as they are no longer restricted to the amount that they have in their savings. This enables the buyer to get a vehicle even while being constrained to a tight budget. That said, here are a couple of pros when it comes to financing a car.

✅ You get the option of getting a better car or a higher trim-level model

✅ The cost is spread out instead of being one big spend

✅ There is a fixed monthly payment

✅ Lets you get a vehicle despite being on a tight budget

✅ Can also help improve your credit score if the monthly payments are paid early or on time. 

✅ Flexible monthly rate or flexible down payment schemes


While financing a vehicle opens up a good number of possibilities when it comes to vehicle choices, there are a few cons when it comes to this payment method.

❌ You have to pay interest on the vehicle. Since financing entails that you take out a loan, you will be paying more for the vehicle than just its standard retail price

❌You don’t own the vehicle until your last payment

❌Car loans can be difficult to get out of especially if you encounter financial difficulties.

❌There may be additional charges if your vehicle gets damaged during your payment period

❌It can negatively affect your credit score or rating. This holds true if you miss out on your monthly payment

❌It can take a good chunk out of your monthly income if you choose the wrong financial plan.

❌If you miss a payment or payments depending on your contract, your vehicle will get repossessed.


So should I go for financing or for a cash payment?

  • As the saying goes “cash is king” and if you can afford to get the vehicle outright then this is the best option to take as the car is yours to do with as you please. You also don’t need to worry about other payments later on and you even get the option of selling the car if you find yourself in a sticky financial situation. Going with a cash payment forces you to live within your means and gives you an asset that you can use for your daily transportation needs.
  • However, if you find yourself in a situation where you can’t pay for a vehicle with cash but have a good source of steady income, then financing a vehicle is your next best option. Ultimately it is down to the car buyer to find a vehicle they want and enter into a contract that best suits their budget. Keeping in mind that failing to make car payments can affect your credit score and can lead to some serious financial ramifications.

Certainly, if you have any more questions or need further assistance, feel free to contact us. We’re here to help!


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    automotive finance
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