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I recently received a gift of money is important, and I am in need of a new car. My credit card was ruined year, so I’m paying for the whole car was a good decision. Others, however, have suggested that this is not the best option – that I have a substantial down payment and monthly payments to rebuild my credit card. What do you advise?

5 Thoughts on Should I pay cash for a car or a large down payment?
  1. Reply
    January 6, 2013 at 2:16 pm

    Just be aware that you can acquire financing at a better rate through your bank than at the car dealership, and there are better ways to rebuild credit than a car payment. But the only way to answer this question is to decide what it is that you want, to live without a car payment, or with one. You have to weigh the options for what is best for you because nobody online really knows your situation. Be smart with your gift.

  2. Reply
    January 6, 2013 at 2:44 pm

    If you make a substantial down payment on the vehicle, you will be able to rebuild your credit, with a very low rate. Why? Because you have taken away so much of the risk by taking the loan under the market value of the car. Thus, it would be no risk for them. You should consider financing the vehicle for one year..

    Hope that helps..

    Also, think about this.. with the economy in the current situation, you would do better to pay over time, as the cost of interest is decreasing..

    Hope that helps..

  3. Reply
    January 6, 2013 at 2:52 pm

    Just pay the car in full but try negotiating with the dealer that if there is a possibility in giving you a discount if you pay cash!

  4. Reply
    Diane M
    January 6, 2013 at 3:50 pm

    Rebuilding your credit will benefit you in years to come. Paying cash for the car is cheaper but if you take the money after the down payment and use it to pay the monthly charges, you will increase your credit score.

  5. Reply
    sandy t
    January 6, 2013 at 4:20 pm

    It would be to your benefit to finance and rebuild your credit. Sounds like this is the perfect time to do that. You’ll have to be creative in obtaining a loan, but with a hefty down payment the dealer will work with you! Much luck.

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