SHOULD I PAY CASH FOR A CAR?

Many think paying cash for a car ensures a better deal. Not necessarily so. That's because whether you pay cash or finance, it's all basically cash to the dealership. They get their money either way you look at it so don't be surprised if you try to use this as a negotiating tool and get little response.

Whether you pay cash for your car or not depends mostly on your situation. Unless you have a lot of disposable income, you want to look at how well served you'll be by tying up a good junk of your money into the purchase of a car. Consider your needs over the next year. What additional expenses do you have? What emergency situations might come up? What type of money do you have in reserve?

Another strategy might be to pay a little more down and negotiate for a shorter term which doesn't burden you with a commitment for the next 5 or 6 years of your life but doesn't tie up your financial resources in the event you need them.

Of course if you are buying from a private party or independent dealer and are talking a few thousand dollars (say $3,000 or less), then it might be worthwhile to pay cash and move on.

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