When it comes to buying a car, a home, or anything else along those lines, you have the option to either purchase it with cash or to finance it with credit. Either option could suffice for your needs, but one may be better than the other. There are pros and cons to buying in cash that you need to keep in mind before making any kind of major purchase. Lucky for you, we have assessed the situation carefully to make the decision easy (or at least as easy as it can be). Read on to find out what you should do the next time you need to buy something big.
Buying something in cash comes with the obvious perk of not having to make payments on it. You don’t have to stress about getting a car repossessed or a home foreclosed because you own it. It’s yours. You will have more bargaining room on the price if you pay in cash because people are tempted by the guarantee. If they have to negotiate a loan for you, they won’t be as willing to cut you a deal. Paying in cash will also save you from having to pay interest, which could add up to a ton of money over time. There are just savings all away around this option.
The main reason why people choose to use financing is because they don’t have enough money to pay for something on their own. If you need something now that will take you years to save for, financing is the obvious choice. It may cost you more money over time, but it will allow you to enjoy whatever you are financing as soon as possible. Another reason why people like to finance is because it helps them build their credit. This will help them secure other financing in the future, should they ever need it. If you want nothing more than to get credit out of the deal, financing is the way to go.
When it comes down to it, you really have to think about your situation. If you can’t come up with the money to pay for something, there is really no other option but to buy on credit. If you can come up with the money, you have to think about whether you want to build your credit score or save money on the purchase. I used to buy everything I had on credit, until I finally realized how much money I was spending on interest and fees alone. I wasn’t able to keep up with all the payments, and my credit score suffered because of it. I figured that it would be better to pay in cash for everything and not rely on credit because that would at least give me peace of mind. You have to make your own decision though.
Think carefully about the information above just like an accountant would, and you are sure to come up with the right payment method for you.
Informative post @kristinaljfom