Do you want to buy a car but you don’t want to go through credit or rental finance? You can opt to buy a car for cash. With this choice, you avoid the risk of auto loans. But is this still a good solution?
The most important expense in a household is the purchase of a car after real estate. Faced with this significant cost, there are several options available to you for buying your car, whether it is new or used. Do you work at the public hospital? We recommend this article, which directly concerns members of hospital staff.
Each of its solutions has its specificities:
- Buy a car with an auto loan
To buy a new or used car, you can use a car loan, which is a loan devoted entirely to the purchase of a vehicle. The purchase of the car is dependent on obtaining the auto loan. If you don’t get it, the sale is canceled. The money obtained by this loan can only be used for the payment of the car. This is a credit intended only for this use. Fore more info Click here Cash for car
This loan will allow you to keep your savings while being able to drive your new car. In order to obtain this credit, you must contact either your banker, or a credit organization (Cetelem, Sofinco, banks such as BNP Paribas, etc.), or directly at your dealer if it offers you financing . You will therefore have to repay this loan every month for the duration of the commitment, which generally lasts 12 to 84 months.
- Rent and then buy a car in LOA
You can also buy your car by leasing, in other words leasing with option to buy. This is a long-term rental in which you pay fixed monthly payments for a period of generally between 2 and 5 years. Although the car is not yours, you still have a manufacturer’s warranty on the car.
At the end of the LOA contract, the customer has several options, he can return the car to the garage if he does not want to keep it. He can also renew his contract (with an extended warranty) or he can buy the whole vehicle by paying the purchase option. But this solution is not optimal financially since you end up paying more than the original price of the car because of the loan interest.
Note that there is also long-term rental (LLD), whose operation is similar to that of the LOA but without the possibility of redemption. In fact, it is a pure rental in which you pay monthly payments without becoming the owner of the car. Once at the end of the contract, you will have to return the vehicle, pay fees for any damage or snags that have appeared on the bodywork or in the passenger compartment over time and you will have to change your car.
- Buy cash
Buying your vehicle with cash is the fastest and most efficient way to buy a car. It simply involves paying the full price of the car all at once with your personal savings. Once the transaction is completed, the car is yours entirely.
This solution means that you have enough savings for the immediate purchase of a vehicle and that you have enough cash left to meet your needs once the car is purchased. With this solution, you will not have to pay any additional interest. However, this solution involves you losing money because of the depreciation of the car. The more discount the car you buy, the more money you will lose when you sell it.
Financially, buying a new or used vehicle for cash is a better deal than a car loan. Dealers have every interest in putting your credit first, but like any personal loan, it will cost you more because of credit-related charges such as interest. Even if certain zero-interest credits will be recommended to you, there will necessarily be some compulsory insurance. Indeed, there is no credit without additional expenses.
Unlike a leasing contract, you will directly own the car. You can sell it at any time and unlike certain financing granted by credit organizations which pledge the car, a certificate of non-pledge can be issued to you.
What are the disadvantages of a cash payment?
By buying a car for cash, you are giving up a large portion of your savings. You might be a bit tight on other purchases, as credit keeps you cash in your account. In addition, with your account less filled, you will lose bank interest.