Buying a car outright or financing

If you are considering buying a car you may have the choice of buying it outright or using finance. Of course it may be that you can currently only afford to finance in which case is it worth saving up to buy outright if you can.

Financing works best where you have a good income but very little ready money, ideally your income should be secure as well; it will often be the case that you need a car or another vehicle in an emergency, perhaps for work and perhaps where your old vehicle is no longer usable.

If you have a good credit rating then financing may be a good option, you could also consider other lines of credit though like loans and credit cards, these may not be secured on any property either so lower risk for you. With financing on cars that is secured on the car you have the risk that you will lose the car if you can’t keep up repayments, even if you have put some cash down and made a lot of the repayments.

Buying outright is great but risky in its own way, with a financed car if you can’t keep up repayments then you lose the car but you may choose to do this if you decide that the car wasn’t worth what you thought it was and would rather get out of the agreement. If you buy a car outright you are stuck with it, you may be able to sell it but you may find that if you valued it at more than it was really worth and were ripped off then you can’t sell it for anywhere near what you paid.