Being a carmaker dedicated to innovative advancements that put the benefits in the hands of the driver, we couldn’t ever be cavalier about the cost commitment when buying a car. We recognize the huge decision involved, and therefore the many considerations to keep in mind while choosing your next set of wheels. The most common, heady consideration is buying a car in cash vs financing it with a loan from an accredited Financial Services Provider.
There are pros and cons to both buying a car in cash vs financing.
In a nutshell, you might have R100,000 saved up and don’t want to commit to the interest rate and extended period of a loan — which is an incredibly, financially-free position to be in — but the offset then is that you get a car worth R100,000.
If you were to finance a car, you may be eligible for an R800,000 car once your affordability level is calculated over the loan period. Let’s dive into the lengthier pros and cons list for either buying a car in cash vs financing.
Buying A Car Cash Vs Loan
What are the benefits of buying a car on finance?
Advantages:
- You can get a better car (at a higher price) than what you would be able to literally afford with cash meaning you could be driving a premium car on a tighter budget,
- The cost is spread out over a lengthier, more affordable period,
- You can budget on a fixed monthly payment,
- The regular, timely payments improve your credit score,
- The loan is often linked to a guaranteed buy-back option which makes your trade-in situation (in a few years) a smoother process too.
Disadvantages
- Your loan is loaded with interest over the period of the loan,
- Can be a difficult contract to get out of before the loan period is up,
- There can be implications against the capital loan should there be any damages to the vehicle or if excessive mileage is recorded.
What are the benefits of buying a car cash?
When it comes to paying cash vs financing a car, the pros are that you won’t have any debt, and — whether a new car or second-hand — you’re bound to be able to bargain a bit better in terms of a cash price. Being free of installments means you avoid the interest which is added onto the capital amount and then divided by the agreed loan period, making the total payment that much more.
Advantages
- You make a one-off payment, and the deal is done,
- You own the car,
- You aren’t bound by a mileage limit over the loan period (with respect to service/maintenance plans),
- You can sell the car at any time without there being any strings attached
Disadvantages
- Depreciating item
- You will likely have depleted your savings and won’t have those funds available for (other) emergencies
- You could reinvest your savings if the car was financed or use it as a deposit to reduce the primary capital loan (and still enjoy the advantages of buying a car with finance)
- Your choice is limited to the actual amount of cash you have available to spend
With six incredible models on offer from Subaru, we’d like to discuss which model you’re interested in and whether buying a car in cash vs financing is the best deal for you. Let’s talk car finance, while we talk about Confidence in Motion. Read the difference between buying a new car vs a used car to also help make your decision easier.
All our dealerships across the country are equipped to help you find the Subaru of your dreams. Book your test drive today, call us on +27 11 608 0116 or email info@subaru.co.za and a skilled member of our team will be happy to assist you.
