Are there cons to buying a new car without taking out a loan?
I am thinking of buying a new car in the next year or two (because it looks like repairs will soon cost more than the trade in value of my car). Because I hope to have a condo by then, I don't want to have both a mortgage and a car loan. I would be able to pay for the car without taking out a loan, but I have several questions: 1.Is there any reason this would not be a good idea? 2. Would they need to do a credit check still, or special background checks? 3. Would it be better to just put a large downpayment and get a smaller loan (which I could try to pay off sooner)? Of course I would make sure to have enough for emergencies afterwards. Any advice or suggestions would be appreciated. Thanks.
Asked By: TechNewbie - 5/1/2007
Best Answer - Chosen by Asker
I'll answer your questions in the order posed... More
Answered By: bostonianinmo - 5/1/2007
Additional Answers (11)
From experience i would not get a loan because if you do you would have to get collision insurance which is very exspensive. But if you do have to get a loan and can put a large down payment that would be my second opinion because that would make your car payments much much lower.
Answered By: barbwire_201 - 5/1/2007
No - there are no cons for you, for dealer - yes because they will not make fat commissions for selling you to a loan company... More
Answered By: Autoinspector - 5/1/2007
If you buy with cash then there is no credit check, it isnt needed. Going the loan route helps build credit. If your credit is fine then just buy the car in cash... no car payment to worry about, and you always get a cheaper price with a cash buyout.... no interest rate on the loan either.
Answered By: Bumbles - 5/1/2007
If you would pay for the car without a loan that would be the best option for you. That way you would be paying the flat cost of the car and not have to worry about making monthly payments. You would save yourself a lot of money in the long run not having to pay interest on a loan also.
Answered By: Ben N - 5/1/2007
You get a better price by paying cash in the first place. They don't do a credit check. If you can put down a down payment that large, then just buy a cheaper car. I bought a brand new Kia Optima yesterday for $13,898. Of course it was the end of the month. And it really is a nice car.
Answered By: Rachael_T_98 - 5/1/2007
It's your money you can spend it any way you want to. There is never a credit check required when you buy something with cash. The only reason for a credit pull is to secure a loan.
Answered By: Bill in Kansas - 5/1/2007
There is some advantage to paying cash, But I would take a look at 0% financing that is short term. If it has a rebate take that first and pay cash The thing about buying a car and paying a loan is that your paying extra for purchase of a vehicle that is constantly depreciating. And I know the "well your paying... More
Answered By: redd headd - 5/1/2007
i don't like paying cash for big ticket items because you may need it for some emergency and you could collect some interest even if it is very little - i'm currently leasing because the last car i bought new was a disaster after the warranty ran out - i doubt if i will ever buy again - i will lease from here on out
Answered By: DoYouKnowMe - 5/1/2007
No, great idea, that intrest really kills you. And if something happens where your late or miss a payment that can devastate your credit... More
Answered By: chrissandefur2003 - 5/1/2007
1. The most compelling reason would be the 'opportunity cost' you would lose. This is the value that cash would accrue as an investment during the loan period. If the loan rate is less than the rate you could get on an investment, then you are better off getting a loan and investing the cash... More
Answered By: theomdude - 5/1/2007
The problem with buying brand new, is as soon as you hit the pavement, the car value dropped by thousands. I think it's better to purchase a car that is a year or two old, the same model car has excellent resale value if you buy a Honda or Toyota. My preference is Honda, excellent car, with very high reliability... More
Answered By: fisherwoman - 5/1/2007
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