Five Benefits of Buying a Car With Cash

My wife and I have recently been in the market for a different set of wheels. Her new job is about 35 miles from our house and our Jeep Liberty is basically throwing money out the window on each trip (due to it’s average MPG of 16.3). We knew that we needed something a bit more fuel efficient.

You probably read our previous post about buying a Mini Cooper, but this purchase never went through. My offer of $8,900 just wasn’t good enough – supposedly the owner had another offer at $9,500. I suggested that he take the deal, because it was more than I was willing to pay.

Recently, we decided to drop the Mini Cooper search and we started looking at VW Beetles. I’ve done my research on the Beetles and they have quite a few things going for them. They get relatively good gas mileage (23 city, 29 highway), they are rated well for dependability, and my 6’8″ frame can actually fit into them quite comfortably!

Just last week, we found ourselves a deal. A 2008 VW Beetle for $8,950. It was the first time I saw a Beetle this new for such a low price. Sure, it had 91,000 miles on it, but it was in pristine condition. My wife and I made the hour drive to the dealership to take a look. The engine sounded good, the transmission felt smooth, and the Carfax report showed no accidents and only one owner. I was ready to flash some cash.

After a quick negotiation, the dealer knocked $50 off the asking price (even though it was already $1,500 below the Kelley Blue Book value), and we drove out of there with an extra vehicle and absolutely no loan paperwork. We are now proud owners of a VW Beetle!

Throughout this whole process, I thought of all the benefits to purchasing a car with cash vs. taking out a loan. As it turns out, I didn’t just think of a couple of benefits of buying a car with cash – I thought of five!

  1. Discounted Price – If you’re buying a car from a small dealership or a private party, they’ll most definitely accept an offer that’s lower than their asking price. Everyone loves cash, and they just don’t know if someone else will come along with a better offer. You are in a great position to get a deal.
  2. No Interest Payments – Even with a low interest rate, my $8,950 purchase would have been over $10,000 if I would have made payments. I’d much rather take the deal at $8,900 with cash.
  3. Increase My Cashflow – When people buy cars on credit, they sign an agreement that says they owe $300 each month for the next 36 months (that would have been the case for this Beetle anyway)! Making that payment each month will severely limit my future choices when it comes to forming my monthly budget.
  4. No Forced Trade-in – Because I have the entire wad of cash to make the vehicle purchase, I’m not forced to trade my car into the dealership for half of its current value. Nope. Instead, I can shine it up and put a post on Craigslist and sell it within 30 days for it’s full value.
  5. Future Flexibility – Since I don’t have an outstanding loan on the car, it will be way easier to sell in the future. Most people don’t want to buy a vehicle that’s still owned by the bank – it just makes the whole purchase process a little more difficult.

What do you think about buying a car with cash? Do you have an argument against it?

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