Purchasing a used or new car with cash is one option available to car buyers. But unless you're affluent, you have to save up enough money first. According to the results of a 2010 survey released by Kelley Blue Book, more car buyers are paying cash. The survey shows that about 20 percent of consumers buying new cars plan to use cash, and as many as 42 percent of people buying used cars reported that they intend to pay for their next vehicle with cash.
Pay off your current car and then start saving to buy a new car. If you don't have extra cash, you may need to save for a few years to purchase a brand new car with cash. Once you pay off your present car loan, continue making that same payment each month into a savings account targeted to buy a new car. Paying cash for you next car will save you money in interest payments and other finance charges.
Research car values before shopping for a new car. Kelly Blue Book is one resource you can use. Find out how much a particular model vehicle is selling for in your area. Don’t be stuck paying more than you should because you don’t know car values.
Check out the prices offered by more than one auto dealer. Don’t be afraid to negotiate the purchase price. If you can’t get the deal you want at one car lot, move on to another. Never have your heart set on a single choice of car or you could end up being talked into paying too much and not saving money.
Hold off telling the sales person that you are paying cash. W. James Bragg, automotive consumer advocate and author of “Car Buyer’s and Leaser’s Negotiating Bible,” recommends waiting until after you agree on a price. Get the best price on the vehicle you can before you even start talking about financing. Ask for a price quote in writing before letting the person know you're paying cash. A car salesperson actually makes less money on commission if you don’t take out a loan so he may not offer you as good of a deal.
- If you're looking to buy a car, select one that is new or only a couple years old. Purchasing an older vehicle could result in higher fuel consumption, as well as more repair and maintenance bills.
- Buying a car that is still under warranty and only lightly used can be a practical choice if you can save a significant amount of money on the purchase price as compared to buying a brand-new model.
- A car that is well maintained lasts longer. Regular maintenance can help make your investment in a new car worth it so that you can keep the vehicle well past the time it takes to pay it off.
Amber Keefer has more than 25 years of experience working in the fields of human services and health care administration. Writing professionally since 1997, she has written articles covering business and finance, health, fitness, parenting and senior living issues for both print and online publications. Keefer holds a B.A. from Bloomsburg University of Pennsylvania and an M.B.A. in health care management from Baker College.