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Buying a Car with Cash: Everything You Need to Know

Buying a Car with Cash: Everything You Need to Know

Purchasing a car outright can be stressful and using cash doesn't make the process much easier. Many dealerships dislike cash, preferring their customers pay via a safe bank transfer or financing plan. That being said, sometimes paying cash for a car is the only viable option. You can also sometimes save money by buying a car with cash, provided you take the right steps beforehand.

How to Buy a Car with Cash

Buying a car with cash follows much the same process as using any other payment method, starting with sitting down and deciding what kind of car you need.

Find the Car That Works Best for You

Determining what you need out of a car can help you identify what make and model you'll need; by deciding what kind of vehicle, you want beforehand, you'll have a rough estimate of how much money to build up. This means asking yourself what car works best for you, which can usually be down with a few simple questions.

Find the Car That Works Best for You

How Many Miles Will I Be Putting on This Car?

Will you be using this car for work? Does your job involve a long commute, or require you to deliver items to various homes? Deciding how often you'll be driving your car will not only help you choose the comfort features you'll want, but also the upper limits of mileage a car can have on it before you buy it. If you drive frequently, a vehicle with over 200,000 miles is likely out of the question; these cars will have significant wear-and-tear and probably require an increasing number of repairs as its mileage rises.

What Features Do I Need?

Your car's features will be defined by a number of factors, including your job, whether you have children, and whether you frequently need to haul certain items. Safety features are the most important element of this decision, and those with families will likely want the more advanced vehicle safety options on any car they choose. Frequent drivers will want better climate control, and people who frequently haul goods will prioritize storage space.

How Long Do I Plan to Drive This Car?

Buying a car cash means that you will own it outright, which can be great for those who are certain the vehicle they chose is right for them. But for some, it can be difficult to pin down exactly what they want out of a car. If you aren't quite sure what you want, a lease may be a better option than purchasing with cash. That way you can drive it for a few years and decide whether you want to renew your terms, or trade to a different car. You can even calculate your lease or loan payments with free tools, like the one available from GoodCar. That way you can see how affordable your monthly payments would be on a specific make or model to help ease the decision-making process.

Compare Quotes from Various Dealerships

Once you've chosen the car that's right for you, find dealerships in your area that offer that make and model. You'll want to get as much information as possible about each car by getting a vehicle history report. These reports can identify potential issues and help you negotiate a better price on your car. Each vehicle history report includes a wide variety of details like:

  • Title Records
  • Junk/Salvage Records
  • Insurer "Total Loss" Records
  • Pricing
  • Sales History
  • Problem Checks
  • Auto Specs
  • Location History
  • NHTSA Crash Test Ratings
  • NHTSA Recalls
  • Awards and Accolades
  • Manufacturer Information

Once you've compared the quotes from several dealerships and gotten any available vehicle history reports, you'll want to negotiate for the best price possible. Most dealerships will be amenable to lowering the price, especially if it seems like you've done your research. By comparing the documents provided by the dealer and your reports, you can point out inconsistencies and bargain for a much better cash price. Once the price is set, simply sign the paperwork, hand over the cash, and drive your new car right off the lot.

Pros and Cons of Paying Cash for a Car

Pros and Cons of Paying Cash for a Car


  • Avoid Missed Payments: Missing payments on your lease or loan can have a devastating effect on your credit and can even result in repossession. Losing your means of transportation can be a disaster and buying a car outright can help you avoid that. When you purchase a car with cash, the only payment you'll make is whatever the initial cost of your vehicle is. That way you won't have to worry about making your payments on-time or keeping up with lease and loan terms.
  • Get a Discount: Some dealerships actually prefer cash and may give you a discount if you are willing to use this form of payment. You'll also save money that may have gone towards the interest on a loan by paying the full amount upfront. In addition to this, having cash on hand can help with negotiations. If a dealer sees you have enough capital to purchase a car, they may be willing to lower the price slightly to avoid losing your sale. Dealerships know that customers shop around for multiple quotes, and likely don't want to have you go to one of their competitors.
  • Own Your Car Immediately: While getting a car through a loan or lease can be a more affordable option by helping you spread payments out overtime, it does have its drawbacks. For one, you won't officially own your car until your loan is completely paid off. If you have a lease, you probably won't own the car at all, and you'll need to return it after your terms have expired. By purchasing your car cash, you will be the full owner the second you complete all the requisite paperwork and drive off the lot.



  • Requires More Money Up-Front: Buying a car is no small purchase and paying in cash means covering the entire initial cost all at once. This can be thousands, or even tens of thousands, of dollars, and quickly drain the average person's savings account. Spending all your money on a car isn't the best idea, as you'll have nothing left over in the case of emergencies. If there is an issue with your job, unexpected medical expenses, or any other problem that incurs a sudden expenditure, you could be in trouble. By using a financing plan, you spend small amounts of money over time, keeping your savings at a much more comfortable level.
  • Does Nothing to Build Credit: Purchasing your car outright can save you on the interest or fees associated with leases and loans, but it may end up costing you more money down the road. Making monthly payments can help you build up credit, and a higher credit score can make getting approved for loans easier in the future. You can also get a much lower interest rate by having higher credit. It can seem like the better choice to pay cash and save a bit of money now, but down the road, having a higher credit score could be massively beneficial.
  • Often Seen as Suspicious: Dealerships tend to dislike cash due to the untraceable nature of paper currency. Cash is the easiest form of money to steal, and there's almost no way to prove who the original owner was. It's also the preferred payment type used by criminals, and dealerships can be liable if they accept ill-gotten money for their merchandise. No, not everyone who uses cash is a criminal, but you may find it harder to finalize a deal if the dealer has a preference for other payment types.

Paying Cash for a Car Frequently Asked Questions

How Much of a Discount Can I Get Paying Cash for a Car?

Some dealerships will offer a percentage off your purchase for paying the money up front, and you'll also forgo the need to make monthly payments. This means you won't have to pay interest or any fees, which can save you money in the long run.

Why Should You Not Pay Cash for a Car?

Buying a car with cash can leave you with inadequate savings, which can be disastrous in the case of a financial emergency. Some dealerships also won't accept cash, as they find it a more suspicious form of currency.

How Long Does it Take to Buy a Car with Cash?

Buying a car with cash is usually faster than working out a financing deal. With a lease or a loan you need to establish terms and discuss your options with an agent, where cash buyers can be in and out of a dealership in as little as an hour.

Is it Better to Finance or Pay Cash?

If you want to soften the financial blow of owning a car, financing is usually a better option. Paying cash means thousands, or tens of thousands, of dollars leaving your account all at once. With a lease or loan, you can make affordable monthly payments and keep your accounts at a healthier level. You can even calculate these lease or loan payments ahead of time with free tools, like the one available from GoodCar.