Credit Vs. Cash For A Used Car

Large purchases require critical planning to ensure one makes the best decision when making a purchase. In this case to determine which method of payment would be best whether using credit or cash for a used car. Both credit and cash payments have advantages and disadvantages when buying a car. Firstly, the cost of paying for the used car in cash would be $5500, however, if I use credit to buy the car it would cost about $1086.25 a month over a series of payments. According to 360 Financial Literacy, an advantage of using credit is that it is convenient and one could easily get the car the same day with good credit. It also keeps track of purchases which helps during tax season. Lastly, purchasing the car with credit would provide purchase protection, meaning that the credit company would handle any disputes that may arise (2014). Also, another advantage is making the purchase with credit will help to build and maintain a good credit score; if the payments are made on time each month. …show more content…
The disadvantage of paying with credit is that one could ultimately spend more money through taxes when obtaining the used vehicle versus just paying in cash. Another disadvantage of using credit is ensuring that the monthly installment is met every month. If an individual does not carefully monitor monthly payments, one could miss a payment and this can affect the credit score. And low credit scores can lead to higher interest rates and occasionally individuals may be denied the opportunity to get help with purchasing the