The Pros and Cons of Saving for a Car Purchase
Making a smart financial decision isn’t always as straightforward as what you buy. How you pay for something can be tremendously important in how satisfied you ultimately are with your purchase. The same holds true for buying a car. Here are a few of the points you will want to consider when weighing the pros and cons of saving to buy a new car.
Pro Number One-Saving Means a Lower Monthly Payment or No Payment at All
In theory, saving up for a car so that you can have lower monthly payments is a good idea. For a very small percentage of people, this may work. However, it is important to consider your other bills. Interest payments add up. If you have high interest rate credit cards, you should worry about paying down those cards before saving up for a car.
Con Number One-Saving Takes Time
If you need a car and you need it now (for example, if winter is coming), then you might not have the time to save money. When this is the situation, you need to get behind the wheel quickly. Further, saving up can be a very frustrating experience, especially when you need a car immediately. This is a major reason that most people choose financing.
Con Number Two-You May Not Be Able to Afford the Car You Want
Saving all the money you need, or even a sizable down payment, could dramatically curtail the kind of cars that you are able to buy. However, if you opt to finance a car, it is possible to get the exact car you want instead of waiting.
Con Number Three-You Don’t Build or Rebuild Your Credit Score
Your credit score and the rebuilding of a credit score is intimately linked to taking on credit and then making timely and consistent payments. Do this and your credit score will improve; however, when you opt to pay cash for a car or any other large purchase, your credit score will not improve.
Overall, the cons to saving up for a new car seem to outweigh the pros. Keep in mind getting all the cash you need for a new car will take considerable time. This is why so many drivers ultimately opt for financing options.