It used to be the case that if you put the money on the table in cash, you have the best chance of big discounts on the list price. However, as new cars become more expensive, many find it harder to pay the full price. And even if you can, paying in cash may not be the best solution. if the money is still in the bank with good interest, car financing may be worth more. So, a car down payment calculator will be a big help.
In addition to buying a property, many people consider their own car to be the biggest purchase they will make in their lives. The dream car may be found quickly – or another vehicle that is useful for one’s own purposes. But when it comes to paying, it gets complicated.
Buying a car: How it used to be
People used to save on new cars sometimes for years, in order to pick up the vehicle from the dealer with the suitcase of money in an almost ceremonial procedure. Today only about 30 percent of new car buyers pay for the car in cash. Others use finance or lease options. But again, there are many variables to consider.
Financing the car: Here’s how
When financing by credit, you as the buyer basically have the choice between your house bank, other credit institutions or the bank of the car manufacturer.
Which payment option is cheaper?
In principle, neither the house nor a manufacturer’s bank can be recommended in general. It depends on the individual offer. In the meantime, the low-interest rates have also reached car loans, especially those from direct banks. Loans over 60 months at an interest rate of well under two percent are no longer uncommon.
In principle, however, the following still applies. The higher the down payment that you can afford, the lower the loan amount. Thus the accumulated interest that you pay over the term is lower. In addition, a far-sighted calculation is a must.
The cash payment
You don’t have to deal with such questions if you pay for the car in cash. The car is yours immediately after signing the contract. You could, for example, sell it immediately to make a deal if you got a bargain.
More importantly, if you put the money on the table in cash, you may be able to negotiate the best discounts. Because for the dealer there is no risk that you will run out of air with the alternative financing by instalment payment.