Everything has its pros in cons in life, so when making a difficult decision, put the pros and cons of each decision and choose accordingly. Let’s say you’re planning to buy a car, and you have a specific budget, I’ve been in this experience myself with my parents, and it actually took us a year to decide which car to buy. You hear a lot of people saying: “buy a car with cash, you won’t be in debt, it’s the best decision you can ever make, don’t buy with finance…” But believe me my friend, not everyone can buy with cash, and not everyone can buy with finance. In fact, you have to make the decision that suits you better.

Let’s assume that you have 20 thousand dollars in cash and you enter a dealership to buy a car. You see a better car than yours and it costs double the price, 40 thousand dollars! You don’t want to buy the car that suits your budget anymore. You don’t want to wait other several years to get the amount of money needed either. You want to buy the one that costs more, so you only have to choose buying in finance. Can you do it? You have to think of it this way:

Car finance, or car loan, is the act of lending or loaning money (by a lender, usually the bank) to a buyer: in fact, the lender makes the direct payment, on behalf of you, to the dealer. That way, you can have the car you want, but you will have to repay to the lender. You will be repaying the loan in Equated Monthly Instalments (EMIs) under specific conditions at a specific interest rate. You will be able to get the car of your dreams. You don’t need to wait anymore to get the cash needed. You just get the car, but the problem is that you’ll be in debt. However, debt sometimes isn’t that bad.

Basically, when you buy the car of your dreams in finance, you have to consider that you will be paying a specific amount of money as an interest rate to the loaner in addition to the price of the car. You have to make sure that you’ll be able to do it for the next few years. I usually suggest that you take a short-term loan (like 1 to two years maximum). The more you pay in a month, the lesser the debt will be. Interest rate also depends: some of them are high and some of them are low. So you have to take that into consideration. Also, take into consideration that the car is NOT yours until you finish the payment. If you stop paying, the car is gone.

At the end, the pros are that you get the car of your dreams, you don’t wait until you get the cash needed, and you pay small payments every month. Cons are that you’ll be in debt for the next few years, you’ll have to worry about the monthly payment, you pay more, and the car is not really yours until you finish the payment. So basically, you cannot sell it or get the newer model until you complete the payment, but if you’re planning to keep the car for a long time, then there’s nothing wrong with getting the car you want and paying a small amount every month, right?

My family bought our car in cash, though. We chose to pay in cash because we had the amount of money needed. In fact, we didn’t really have a specific car in mind, but we actually saw many better cars that we really wanted to get instead. However, I have to admit that we’re happy with the car we bought anyway. The good thing about what happened is that we got a car we needed for a good value for money, the car was fully ours, we didn’t worry about monthly payments, and that’s it, we moved on in our lives.

Actually, we planned from the beginning to a buy a car in cash, but the thing is: we really waited for too long to collect the money. We had our first car for more than 15 years, until it got old! During that time, we were collecting the money to buy a new expensive car, and we got it at the end. But I have to admit, too, that there were many options we needed to add but couldn’t because we abided by our budget, and that was kind of unfortunate because we would have benefitted from the luxurious options the car would have had. Actually it depends on each one’s preferences, budget, and salary.

The pros of buying in cash is that the car will be totally yours with the insurance that you choose (not the dealership obliging you to get a specific insurance like what happens when buying a car in finance). You are able to resell it whenever you want to get another car if you have the money to do it. However, buying in cash might require you a lot of time to collect the amount of money (depending on how much you make), and your choices would be really limited. 

Well, this is a totally different topic, where you don’t actually buy a car, but you rent it for a long time that doesn’t really surpass 48 months. You’ll have to pay an amount of money in each month as a lease fee. You first start with a down payment, and you continue with a monthly fee (just like buying in finance). As I said, everything has its pros and cons. If you do some calculations, you’d find that actually paying for buying a car would be better. However, when you rent a car, you’ll be able to substitute it with a newer model without actually worrying about selling your car, calculating its resale value, and others. If you’re someone who likes changing cars every year, 2, or 3, renting a car would be better for you. The bad thing is that the car is not yours and you’ll be abiding by the conditions of a lease contract, but you’ll be driving and using the car as it’s actually yours. However, if you’re someone who would rather keep a car, then buying a car would be better for you. If you’re able to pay monthly but don’t have the cash needed in hand, then it’s better for you to buy a car in finance rather than paying for a long-term car rental.

As I said, it depends on each one’s preferences, budget, and salary. You just have to choose what suits you better, and I don’t think that there’s something better than the other. It just depends on how you want or can spend your money on a car.