When we decide to buy a car, one of the first decisions is how to finance the purchase: pay cash or opt for a financing plan? Although it is often preferred to pay cash to avoid interest, experts say that financing can be a more advantageous option.
When we decide to buy a car, one of the first decisions is how to finance the purchase: pay cash or opt for a financing plan?
Why Financing a Car May Be Better
Economist Eli Defferary explains on her social media that while paying cash seems like a cheaper option, that’s not always the case. By paying all at once, the dealer no longer makes a profit. On the other hand, when financing, dealers often offer additional discounts, as they earn commissions on credit transactions. However, it is crucial to review the interest and loan terms. The APR (Annual Percentage Rate) is a key indicator to evaluate the real cost of financing a vehicle.
Aspects to Consider Before Buying a Car
Whether new or used, there are several factors to consider when buying a car:
In summary, while paying cash may be a viable option, financing can offer additional benefits such as discounts and the ability to spread the expense over time. However, it is always important to analyze the total costs and terms of the loan before making a decision.
