This is a good question and one that many people face when it comes to acquiring a car. Financing of cars has been a growing attraction for consumers over the last few years and with cars these days becoming more expensive, it seems like a very good option to consider. Having said that, buying a car outright does have its perks as well.
So, let’s start with the positives of both options. When you finance a car, the cost is obviously watered down quite a lot and broken up over a period of time rather than paying in one lump sum. This tends to work a lot better for people that don’t carry the capital to invest in a car right away and is a lot easier on the bank account. Another good thing about financing is that you can generally aim a bit higher up the food chain in terms of what car you can have. Having said that the great thing about owning a car from the word go is that it is yours. No one has control over what you do with the car and what you can do to it. It also allows you to sell it at any point for a direct profit or loss without the hassle of complicating your payment plan.
Now, let’s move onto the negatives. If you finance a car then you are stuck with that plan until it is over, unless you can pay off the remaining budget immediately which often isn’t the case. Also, there after often additional costs involved including interest that can actually make the car more expensive over that period of time rather than if you had bought it cash. Most mass-produced cars these days also decline in value significantly after a year or two so when it comes to selling the car it can equate to a big loss of cash overall. This applies to cash bought cars as well so there is no real escape from the situation unless you invest in a car that you know will increase in value over the years you own it. Buying a car does also make a bigger dent in your finances as a larger sum of money is being rolled out of the bank in one hit.
Overall then, both options have strengths and weaknesses to the consumer. Personally, I would say if you have the capital to put forward into a car then I would buy it outright, but if you want to go for something a bit nicer and water down the costs on a month-to-month basis then financing is certainly a great option. Owning your own car is more independent which can be a good and a bad thing but financing keeps you more within the realms of the manufacturer or supplier, which again can be a good and a bad thing. At the end of the day it’s all down to personal preference and most importantly, an individual’s financial situation.