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Borrow Or Pay Cash?

Car on coins

Borrow Or Pay Cash?…..

Thinking about buying a car? Got the cash sat in the bank to pay for it but not sure whether to use it to buy a car? Wondering whether to save for your next car or take out a loan? You may find the answers that you’re looking for in our Borrowing vs. Cash Analysis. There’s no right or wrong answer, it really depends on your circumstances. Our guide will help you to understand the pros and cons of both methods so you can choose the best option for you.

The Advantages Of Borrowing

  • Buy Now & Use Now Borrowing can enable you to have the car that you want or need now and have all the usage benefits instead of having to wait to save to accumulate enough cash to purchase it outright.
  • Buy At Today’s Prices Borrowing enables you to buy at today’s prices. If you need to save over a prolonged period of time car prices may well rise due to inflation and other factors which would mean you having to pay more.
  • Don’t Lose Investment Returns If you use your own cash then you need to consider the return that you lose when you withdraw your cash from where it’s invested and use it to buy an asset. Often the interest you pay to borrow compared to the compound interest that you’d generate by keeping the cash invested is minimal.
  • Establish A Credit History – if you haven’t borrowed before, starting with a car loan can be a great way to establish a credit history which can help you to secure loans down the track when you need them.
  • Flexible Deposits – most mainstream car loan providers have a minimum loan amount of around $5,000. This means that you can set up a loan which allows you to use cash as part payment and a loan for the remainder.
  • Shop Like A Cash Buyer – With pre-approved finance you can shop around for the best car price and negotiate with sellers with your money already pre-arranged.
  • Potential Additional Protection There can be additional protection available if you use finance that uses the asset as security. If you have issues with the quality of the asset you may be able to get some assistance from the lender in the event of a dispute with the supplier.
  • Potential Tax Benefits* – If you are using the asset for business purposes there are various tax benefits potentially available to you in relation to the interest charges that you pay.


The Advantages Of Cash

  • No Interest Or Fees When you use your own cash there’s $0 interest or fees to pay.
  • Complete Ownership Unlike with some types of finance where ownership of the asset is transferred to you after the final payment is made and where there is the possibility of repossession if you miss payments when you buy with cash the asset is yours from day one.
  • Easy Re-Sale If you want to sell the asset it’s a simple process as you don’t need to worry about having to organise for any outstanding finance to be paid out.
  • Strong Negotiating Position With your funds already in place you’re in a position to buy immediately which can put you in a strong bargaining position with the seller.


Find the Best Car Loan Deals

If you decide that borrowing is the best option for you then using the tools and resources at and working with a Qualified Finance Broker can help you to find the very best Car Loan deals for your individual circumstances.

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*We strongly recommend that you consult your accountant or tax advisor to confirm the tax benefits available to you prior to entering into any finance agreement. The information provided is not intended to be used as taxation, financial or legal advice.



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