Buying a used car can be a bit overwhelming – especially if this is your first time on the market. Shopping for a used car is a very involved process, and requires a good amount of decision-making if you’re looking to secure a great car finance on a fantastic used car.
A unique aspect of shopping for a used car is car finance. Because the cost of a used car is significantly lower than a new car, it’s often possible to purchase a car outright with cash – avoiding long financing terms, and potentially saving you some money.
This is quite rare when purchasing a new car, due to the high cost of a brand-new automobile. And while most used car shoppers do end up choose a car finance, you may be tempted to drop some cash outright – and pick up a great used car without worrying about repayment.
But how can you decide if financing a used car is right for you – or if you’d be better take a car finance? Well, we’re here to make things easier for you. Our list of the pros and cons of financing a used vehicle will certainly help you as you make your decision on car finance.
Of course, there are some drawbacks to financing – as compared to paying cash. Let’s take a look at a few of those drawbacks, so that you can get the full picture of the benefits – and disadvantages – of financing a used car.
When you finance a car, you’ll pay more for it than you would if you purchased it outright – that’s just a fact. The interest you pay on your loan adds up – so financing a car will almost always lead to a higher overall cost, as compared to a cash-only purchase.
When you finance a car, you don’t have too much negotiation leverage. You may be able to cut a deal here and there, but you’re likely bound to whatever the dealer offers you.
Cash payments, on the other hand, are very attractive to dealerships. Dealers know they’ll get immediate profit with minimum paperwork – and may be willing to negotiate a better price in order to get rid of a car quickly.
When you finance a car, you don’t own your car until you pay it off – until then, the issuing lender holds the title, and can repossess your car if you don’t make payments. If you make all of your payments on time, this isn’t a problem – but it can be attractive to just pay cash for a car, and own the title yourself immediately, so that’s certainly a factor to consider.
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