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How to Buy a Car With Cash (From a Dealership or Private Seller)


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When car shopping, there are plenty of reasons to avoid expensive financing. Although you might feel like everyone is financing their ride, the reasons to avoid a car loan add up quickly. 

First, the costs of financing can get out of hand quickly. With the average monthly car payment sitting at well over $600, it’s easy to see how that size car payment puts a major dent in any budget. As a cash buyer, you can avoid interest charges and monthly payments that stand between you and your other financial goals

Signing up for expensive financing puts pressure on your finances. If you want to avoid this drain on your budget, it’s time to learn how to buy a car with cash. 


How to Buy a Car With Cash

Buying a car with cash offers many benefits. 


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The choice allows you to lower your monthly expenses. When buying with cash, you have more leverage to take advantage of discounts and negotiate a lower sticker price. Plus, by avoiding interest payments, you spend less money over the long term.

Read on to learn how to buy your next car with cash. 

1. Save Up Your Money

The most difficult part of buying a vehicle in cash is saving up your money. It isn’t easy to save up thousands of dollars — but it is possible.

Start with a dollar goal in mind. According to Kelley Blue Book, in 2022, the average price for a new car is over $47,000, and the average price of a used vehicle is over $28,000. But the type of vehicle you want to buy has a big impact on the ballpark price. Do a bit of research to determine how much you might need to spend on a vehicle that meets your needs. 

Once you have a general savings goal in mind, map out a realistic timeline. For example, if you have $500 per month to save, it will take a year to save $6,000. Choose to intentionally set aside the funds in a separate savings account. If possible, automate your savings goal to move funds for you each month. 

If saving up a large amount of money is challenging for your budget, that’s understandable. You can only cut so much out of your budget, but your earning potential is more flexible. Consider picking up a side hustle to save for your next vehicle. 

2. Decide if You Want to Buy a New or Used Car

When you have built up some savings, it’s time to decide if you want to purchase a new or used vehicle. The right choice varies based on your needs. 

A brand new car is easier to shop for and comes with advanced features and customization options. Most new cars boast lower maintenance costs, better gas mileage, and warranty coverage. 

Since most new vehicles run for around 200,000 or more, you could hang on to the vehicle for over a decade. But new cars are also more expensive to purchase, have higher car insurance premiums, and depreciate faster. 

Conversely, a used car offers a lower purchase price and insurance premiums. But there is often a limited selection. Plus, if your used car doesn’t come with a dealer warranty, higher repair costs can take a bite out of your budget. 

3. Find a Car

We use our vehicles every day. Since you spend so much time in your vehicle, it’s important to find a car that meets your needs. 

Start by making a list of things that you absolutely need to have in your car. One of the first things to nail down is the number of passengers you need to fit. A family of six is going to need a vehicle that seats at least six people. 

Other must-haves might include storage space for road trips, safety features, affordable maintenance options, known reliability, and a realistic price point. 

In addition to a list of needs, write down a list of things that would be nice to have in your vehicle. That might include a great sound system, extra tech, heated seats, and other add-ons. Your unique situation determines what’s necessary and what’s negotiable for your next vehicle. 

Once you have a firm idea of what you want, it’s time to shop around. Start by looking online to avoid the hassle of going to dealerships that don’t have what you are looking for. A few popular choices include Cars.com, Autotrader, and CarMax. You might need to explore out-of-town dealerships to track down the vehicle you want. 

4. Negotiate the Best Price

Once you find a vehicle that works for your situation, the negotiations for the best price can begin. Track down the CARFAX to find out more about the vehicle’s history. The details in thie report will let you know if there are any issues to be aware of, and you can use any issues you find as bargaining chips in the negotiation process. 

Some sellers will provide this information. But check the date of the report to confirm you are getting the full picture. 

Once that’s done, follow these guidelines to negotiate with either a dealership or a private seller. 

If You’re Buying From a Dealership

The process usually starts with a test drive when you find the car you want at a car dealership. Even if you love the vehicle, make sure that the salesperson knows you aren’t going to overpay for it. 

A smart negotiation strategy starts with doing some research ahead of time. Walk into the dealership knowing how much the vehicle you want should cost. Ask for a better price than you think you can get so that the salesperson has the chance to meet you in the middle. 

Don’t accept the sticker price as the final price of the car. Instead, ask about any rebates or incentives that could lower your costs. Before you walk into the dealership, prepare yourself to walk away. 

Set a firm number based on your savings. It’s not worth it to dip into your emergency fund, so if you’re not able to negotiate a fair price, walk away. Remember, there are other vehicles out there that could fit your needs. 

If working with a dealership, they might try to sell you on taking out a car loan. But the goal is to have enough money that a car loan isn’t necessary for this purchase. So if you have the funds, say no to the loan. 

If You’re Buying From a Private Seller

If you buy from a private seller, there’s still room to negotiate. Start by pointing out any minor defects or issues in the vehicle’s past. If there are any questions, ask for a sales price that reflects those flaws. Hesitate before accepting any final offer, and be willing to walk away from the deal. 

Of course, you might not score the price you want, but don’t take it personally. It’s better to ask for a lower price and see what happens. The worst that can happen is that the seller refuses. 

5. Pay With a Cashier’s Check

Buying a car with cash doesn’t mean showing up with a duffel bag of actual cash. Instead, you’ll need to pay with a cashier’s check. Unlike a personal check, you’ll need to go to the bank and purchase a check for the necessary amount. 

If you don’t have an account with the bank you visit, expect to pay a fee for your check. This should be small in comparison to the cost of the car — $5 or $10 per check is typical.

If you want to pay with a credit card to tap into rewards points, that’s an option at some dealerships. But many dealerships limit the amount you can put on your credit card. Ask about this option upfront if you’re counting on getting lots of rewards points out of the transaction. 


Final Word

Buying a car is a major expense. But avoiding a car loan will help you save money on principal and interest payments for the duration of your would-be loan term — hundreds of dollars per month, no doubt. That’s a big boost to your finances.

Without a car payment, your monthly expenses drop and you can enjoy a taste of debt freedom. If you are ready to shop for your next car but can’t stomach a hefty car payment, make paying in cash a priority. 

I'm also including a bio here: Sarah Sharkey is a personal finance writer who enjoys helping people make better financial decisions. When not nerding out about money, Sarah enjoys traveling, hiking, and reading. You can connect with her on her blog Adventurous Adulting.

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