When it’s time to get a car, we have two choices—paying outright or financing. Paying outright feels like a great way to avoid debt, but financing also has its good sides. When looked at closely, one may find financing to be the better option. This list explores the reasons financing can often be a smarter choice than paying outright for a car.

More Cash for Life’s Priorities

Financing won’t eat up as much of your cash as outright payment would in one go. Even though you’ll still pay in the future, you’ll have a good amount of cash at that moment to attend to other needs. With financing, other aspects of your life won’t suffer just because you decided to get a car.

Access to Premium Car Models

When you choose to pay outright, you can only get what your cash can afford, and these car options may not have all the features you desire. Thanks to financing, you can go for newer and more improved models, enjoy better performance and advanced comfort and safety features, and then pay up in bits.

Good Credit History

Buying a car is a good time to boost your credit profile, and financing will help you with that. Remember to make the remaining payments on time. As you consistently manage your financial obligations, such as paying off loans on time or ahead of schedule, you establish a strong credit profile that lenders can trust.

Manageable Payments

When you pay for your car monthly over a long period, it’s easier to bear the cost than if you pay it all at once. Even if you can afford the car, it won’t be a huge hit for your pocket. Compare payment plans and then pick the one with the least impact on your financial situation.

Option for Early Payoff

Paying off your loan beforehand is a smart financial move, especially if your financial situation improves during the loan term. For instance, you might receive a raise, a bonus, or unexpected income that makes early repayment feasible. You could save money on interest payments by simply paying off the loan early.

Grow Your Investments Instead

The money you’ll spend when paying straight up for a car is money that can be put into real estate, stocks, mutual funds, and other investments. You don’t have to delay jumping on these investments because you’re getting a car. Keep them going and growing while you tackle the car loan little by little.

Opportunity for Refinancing

Thanks to refinancing, you can even pay less monthly than you were supposed to on your original car loan. A good time to consider refinancing is if your credit score has improved or if you now qualify for better interest rates. If refinancing favors you, you’ll have more money to spend on other things after making payments.

Flexible Down Payment Options

Financing allows for customizable down payments, making it easier to adjust the upfront cost to fit individual financial situations. This flexibility means buyers can opt for a smaller down payment and keep more cash on hand or pay more upfront to reduce monthly payments.

Option of No Interest

While loans often mean paying back with extra money, also known as interest, there are finance options with 0% interest. That means even though you’re spreading the money to your comfort, you still don’t spend anything extra in the long run. To enjoy this, you may need to have a good credit score.

Inflation Escape

With a low or zero-interest car loan, you may escape inflation in the future. This is because, even though prices would rise, you’ll still pay the agreed amounts, which will now be cheaper than the current value. If you were saving up for an outright payment, you’d have to increase your savings target when inflation hits.