Financing vs. paying cash: the heavyweight car buying title fight

When you’re in line to get a new car, there’s a fair bit more involved than just picking the one you want and getting behind the wheel.

One very important ingredient that goes into the car buying mix is how you’re planning on actually paying for it - by one lump sum cash payment (they do say cash is king, right?) or should you instead go for car financing?

In this article, we’ll go through some of the benefits of each so you can determine which method would be better suited to you.

The contestants each one another up in the centre of the ring, while Bruce Buffer introduces each of them. The crowd is bustling; everyone wants to find out whether paying cash or financing is the true car buying champion of the world and there is real excitement in the air because today we will finally find out.

Mr. Buffer announces his iconic “Let’s get ready to rumble”, the ref lays down the rules and the bell dings for the first round. Here we go!

CASH lands the first blow with a nice right jab:

• You don’t have to worry about any monthly repayments. This can be a good thing not just for budgeting purposes but also if you somehow end up losing your job (upon which time you’d struggle to or be entirely unable to make said repayments).

But FINANCING counters with a solid blow:

• You don’t have to save for years and years. Because you’re able to borrow 100% of the purchase price of the car, you don’t have to scrimp and save for a number of years to get behind the wheel of that beautiful new car you want.

The bell dings and that’s it for round 1. If I was a betting man I’d say FINANCING had the up[per hand in that one.

FINANCING comes back from its corner into the centre of the ring with fire in its eyes. As the bell dings, there is no hesitation whatsoever and FINANCE throws a hard right fist that really rocks CASH.

• You don’t have to clear out your savings. When you pay cash for a car, you’ll be taking a huge chunk out of the money you have on hand which can be bad for a couple of reasons. For example, if you run into an emergency (health, house, etc.) and desperately need funds to help, you won’t have it anymore. You’d also not be able to invest it into something that offers a healthy return that’s higher than the interest you pay with a finance deal, so could be losing potential financial gains in the process.

The ref intervenes for a bit of clinching from CASH; it looks like it could be really hurt from those blows from FINANCE.

But it’s not over yet, ladies and gentlemen! CASH finally lets go and throws a left body shot.

• You’re going to be spending less money in the long run. Because it’s just one lump-sum payment and you’re done, you’re not paying any interest on top or fees and charges that may have been payable with a loan.

And the bell rings to close out the second round of this massive title fight! Very excited to see how these two measure up in the third and final round.

These fighters are amped up and ready to take it to the limit, ladies and gentlemen. As they meet in the middle, you can truly sense the hostility between them. They match one another’s intimidating stare-downs, and the bell rings for the final round.

Wow! FINANCING is like a bull out of the gate. I’ve never seen this much energy in the ring! CASH tries to put up a parry but FINANCING gets around it with ease and hits CASH with an incredibly graceful yet heavy left/right/uppercut combo, knocking down CASH.

• Build/improve your credit history. Provided you make all of your repayments on time, you’ll be building up or improving upon your credit history and, in turn, your credit score, which will help you secure other financing and loan packages (potentially at improved rates) in the future.
• You can claim repayments as a tax deduction. If you own a business and finance a work-related vehicle, you can deduct everything from the interest you’re paying to servicing, insurance, repairs and more (as each business is different, be sure to check with your accountant to confirm)
• If you do your research you can find incredibly low rates. Providing you don’t just jump straight into the first financing offer that you come across, chances are you’ll be able to find a pretty bloody awesome interest rate (psst… call us on 1300 787 288 and we’ll do all the legwork for you!).

That last blow looks to have put the final nail in the CASH coffin, folks. It has not moved much if at all since hitting the floor, and the referee comes in to call it done and dusted, with the final bell ringing in the background.

FINANCING has done it just a few seconds into the final round!

Let’s be honest though, it was always FINANCING’s fight, right from the beginning. CASH did its best but just didn’t offer everything FINANCING did and because of that, went down with very little effort from FINANCING.

And Bruce Buffer comes into the ring to make it official...

“And STILL the heavyweight car buying champion of the world…. FINANCING!”

Well if they say cash is king, the king is most certainly dead.

If you’re ready to finance your new car, we’re here to provide expert assistance to ensure you get the very best deal available. With over 25 years worth of experience in the financing game, you can bet we’ve got the ability to match you with something that suits your needs to a T.

Get a free car finance quote in under 60 seconds- we know you’ll be nothing short of impressed with what you see. You’re then able to apply in just 5 minutes or less online. Yes, it really is that simple and straightforward!

Plus, you’ll be happy to know that our industry partners are here to help you skip the stresses of the negotiation process and will tap into their enormous network of dealerships all over Australia to find you the most amazing purchase price possible. 

Would you like to learn more about car financing or do you have any questions for us? We’re always happy to chat and clear anything up for you. Give our friendly team a call now on 1300 787 288 or, if you’d prefer, use our online contact form to send us a message and we’ll be in touch with a response as soon as possible.

Disclaimer: Nothing in this article should be assumed as personal advice. You should consider whether the information is appropriate to your needs, and where appropriate, seek advice from a professional financial adviser.