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Loan Or Cash

Should I get a car loan or pay cash?

Purchasing a car in Saint Louis, whether new or secondhand, is a costly investment. You might have chosen the right car as per your budget and requirements, but you are probably not sure how to pay for it. This is largely determined by your financial state: do you have enough money to pay cash for it directly, or will getting a car loan be a better idea?

If you're struggling with deciding whether to get a car loan or pay cash for a purchase from Chase Auto Group. Keep reading to evaluate the pros and cons of each! Don't forget to use the Chase auto payment calculator before finalizing your decision; or visit one of our stores and seek assistance.

Pros of paying for a car with cash

First, let's go through the top three advantages of paying cash when buying a car:

1. You avoid paying interest expenses

Paying the lump sum price in cash saves you money since you escape years of interest installments on a car loan. Based on the scale of your loan, interest rate, and duration, you are likely to save thousands of dollars by not getting one to fund for your car purchase.

2. You may purchase a less expensive car

If you only have a specific amount of money to invest in a car, paying in cash helps you stick to your overall budget. Moreover, Chase auto buying can also assist you in preventing the possibility of being enticed to buy a more expensive car than you intended.

3. You don't get "upside-down"

A typical new car loses around 20% of its value in the first year. This drop in value can be a major issue when you obtain approval for a car loan and possibly end up paying more than the automobile is worth. This situation, where you get the reverse of what you were intending to, can rightly be termed as getting upside-down. When you buy a car with cash, though, you can always get the full value of the used car whenever you sell it.

Cons of paying cash for a car

Here are some disadvantages of paying cash:

1. It reduces your savings

Based on how much money you have in your bank account, spending a huge amount of cash on a car purchase might empty your bank account. This will consequently make you helpless when dealing with a financial emergency in future. Make sure you check out various Chase autos for sale to land the best deal.

2. Reduced car value

Unless you purchase a limited edition or vintage model, all cars decline in value. Normally cars depreciate 50-60% of their value during the first three years. However, it begins to slow down in the fourth year. Hence, if you choose to purchase a new affordable car with cash, you must be aware that you could lose a considerable amount of cash.

Pros of getting a car loan

Two great advantages of a car loan that cannot be overlooked are explained as follows:

1. You can manage to buy a car

The primary advantage of an auto loan is that it expands the possibilities in the type of car you can purchase. Without loans your purchase options are limited to the cash you have readily available, However, at Chase Auto we have an extensive variety of affordable cars.

2. It improves your credit

Your credit history will rise if you routinely make your installments on time every month. Auto loans are a wonderful method to enhance your credit score, even if you have poor credit and would like to rebuild it or improve your already decent credit score.

Cons of getting a car loan

Here are some cons of a car loan for buying a car:

1. You make monthly installments

Nothing at all is free, and this is especially true when it comes to purchasing an automobile. If you receive approval on a car loan, you'll have to pay monthly installments to the lender which takes up a good portion of your income.

2. Expensive interest rates

Although your credit history entirely sets the interest rate you apply for, interest is definite to add to your monthly expenses. Moreover, in order to compensate for the risk you offer to the bank as a borrower; your interest rate will be greater if your credit history is poor. Nonetheless, you can easily use the Chase auto loan calculator to figure things out beforehand.

Bottom Line

Purchasing a car with cash is an easy and quick process: you select the vehicle, visit the salesman and hand over your cash. This one-time payment helps in saving money every month for your future automobile or other product instead of making monthly payments to a financing company.