Many people these days ask why finance a car instead of paying cash? Well, car financing has been around for decades and nearly every person in the world wants to buy a vehicle with finance since only few have the necessary capital to buy it in cash. In most cases, it’s beneficial even for all those who can afford to purchase a car to finance it. There are many benefits of financing a car. There are even benefits if you have poor credit and use a local buy here pay here dealer. Let’s have a close look at few of them.
So Why Finance A Car Instead Of Paying Cash
One of the biggest benefits of financing a car, especially with extremely low interest rate, is all the money you can easily save. There are some situations where this type of financing will not have the ability to save you good money, especially if your car is fairly inexpensive, or you fail to obtain a good interest rate.
For all those who can secure a low interest rate, or even zero interest rate in some circumstances, financing a vehicle is a good option because it allows you to keep your money for the duration of the loan term. If you can place your money in any interest bearing account or some investment, which can earn you a higher annual percentage or higher APR rate than what you’ll be paying for your car then you can actually stand to come out slightly ahead.
Another major benefit of purchasing a car with financing is related to the dealership. Every dealer wants to make profit so they look for ways that can help them earn more profit. One area where most dealerships make profit is by financing vehicles. In most cases, when dealership itself is not itself extending this facility, they’ll receive some kickback from financer as a reward for selling their financing. This benefits the car dealership and also the buyer.
Sometimes dealership might be reluctant to work with a buyer who’s interested in paying for the car in full. This is mainly because dealerships get very little profit margin as it is built into the cost of car so they need to sell it for some ticket price in order to make some kind of profit.
When you want to buy a car with financing, dealerships will be more than willing to work with you on the price of the car, or even the amount they’ll be offering you to buy your old car. This is mainly because they’ll make suitable profit by financing instead of strictly through the vehicle. Mostly, the money you’ll pay as interest over the course of your car loan will be little, if any more than the money you’ll pay for buying the car in cash.
Conclusion: Why Finance A Car Instead Of Paying Cash
There are some circumstances where it’s not beneficial to buy a car with financing. One of the first, and most important steps you can take when you’re planning to buy a new car is to weigh all the options you have available to you to pay for the car to determine which one would offer you the lowest price over the long run. This will ensure that you receive the best possible deal when buying a car. There are many more reasons on why finance a car instead of paying cash, but those listed above are sufficient to get you started!