The perks of buying a car in all cash

Aside from the obvious bragging rights that come with buying a car in full off the lot, there are a few other added benefits.

The downsides: When you may not want to buy a car in all cash

If you get a 0% APR financing deal, then buying in all cash might not be smart. To get the most bang for your buck, you should take advantage of the interest elimination and conservatively in the meantime. You can use a really safe mutual fund, money market fund or target date fund as a low-risk option. Other special deals from the dealership might also make you rethink your decision to buy a car in all cash, so take them into consideration before finalizing your purchase. For some, spending tens of thousands of dollars in cash is no skin off their back. For others, it'll drain their savings. Don't spend your emergency fund on a car if you don't have to, especially in an era when the employment landscape is so uncertain.

Don't want to use cash? Consider this alternative

You don't have to set up a five- or seven-year loan repayment plan for your vehicle. You can usually squeeze that time horizon down to just 36 months or three years. Your monthly payments will increase but you'll pay a lot less in interest. Reserve your cash in a high-yield savings account. When federal interest rates increase, high-yield accounts typically compound by a few percentage points each month, so you may actually make more money by taking this route if your vehicle interest rate is low enough. While federal interest rates are down, so are high-yield savings account yields. In that case, you can use a tool like to safeguard your money while still earning some bucks.

Rachel Curry, Author at headlights.com

Rachel Curry

"Hey! My name's Rachel Curry and I'm a full-time writer who loves telling the world's stories as much as hanging with my dogs (and that's saying a lot). A University of Delaware graduate, I've traveled extensively, living everywhere from Ireland to Thailand. Bylines include Matador Network and Delaware Today."