Financing vs Paying Cash for a Used Car

Should you finance or pay cash for your next used car? The pros and cons of each, and how to get the best rate on a used car loan.

Most people finance a used car, but paying cash can make sense too. Here is how to choose.

Paying cash

No interest and no monthly payment. The downside: it ties up savings you may need for emergencies. If paying cash would empty your savings, a small loan is often the safer choice.

Financing

Spreads the cost over time and can help build your credit when you pay on time. Your rate depends on your credit, the age of the car, the term and your down payment.

How to get a better rate

• Put more money down.
• Choose a shorter term if the payment still fits.
• Add a co-applicant with strong credit.
• Pay down credit card balances before you apply.

What about leasing?

Leases are mostly offered on new cars. For a used car, a loan with a fair rate and a term of 60 months or less is usually the best value.

Want real numbers? Send our finance application and the Plano Motor Group finance team will lay out your options side by side.