Between gas, maintenance, and other expenses, car ownership can be expensive. The initial purchase of a vehicle can also easily set you back, which is why so many people finance their auto purchases. In fact, finder.com reports that approximately 44 percent of Americans finance the purchases of their vehicles, and collectively, there is about $1.1 trillion in auto debt. But is financing a car purchase the best decision?
Some of the many benefits of buying a car in cash include:
It costs less
Although it will vary based on several factors, valuepenguin.com currently reports that the nationwide average auto loan rate is 4.21 percent. The fact of the matter is, financing a car will simply cost you more money in the end because of the extra money that’s paid in financing charges. If you’re looking to save money, you’ll do so by purchasing your car without financing it.
It can help prioritize your purchase
USAToday.com reports that there has been a recent spike in car payments, with the average American’s car payment being $551/monthly. Although we are seeing an increase in the average auto payment, a monthly payment still has less sticker shock than paying for a car in cash. With a cash purchase, most consumers would be forced to buy a car that costs less. This can help put your purchase in perspective and make a more modest selection.
Your credit score is irrelevant and it’s not affected
Some consumers won’t qualify for a car loan depending on their credit history; in some cases, they may not eligible for lower rates. Even if you do qualify for a car loan, it’s crucial to always make timely payments. If you’re in the process of rebuilding your credit score, keep in mind that missed or delinquent payments can set you back considerably. When you purchase a car in cash, you won’t have any of these concerns since you’re not making monthly loan payments.
Selling future payments for a lump sum of cash
If you’re receiving payments from a structured settlement or annuity, it may be possible to receive that money sooner in a lump sum. Doing so may give you the opportunity to possibly purchase a car in cash, rather than taking out a car loan. Contact DRB Capital today to learn more about the settlement funding process and to get started.