Buying a car with cash is a great way to avoid paying a lot of interest on a loan. Start the car buying process by determining your budget. Then decide the type of car you want and can afford. Review the car listings and contact a dealer or dealer. Withdraw the cash or get a cashier's check, and make the purchase. Get an official receipt and documentation to seal the deal.
Steps
Part 1 of 3: Budgeting and Shopping for a Car
Step 1. Consider your daily needs around the car
Think about how many people you need to transport each day, as this will determine how many seats you will need. Take into account your driving habits and whether you will need a car that is primarily suitable for driving on the highway or on the street. Think about the weather conditions in your area and whether you will need a car equipped with certain features, such as four-wheel drive.
Step 2. Calculate the long-term cost of owning a car
Buying the car, even with cash, is only the first step in the process of owning one. Review and add up the other negotiable costs, like monthly insurance. Then it tries to calculate daily costs, such as fuel use. Don't forget to include government fees or charges, such as registration or inspection.
For example, it is generally cheaper to insure an older model car with higher mileage than a new car that comes straight from the depot
Step 3. Establish a realistic budget for the cash purchase
Go through all your finances and try to determine how much cash you can set aside for the car purchase. Be sure to include bills and living expenses, as well as an emergency fund, in your calculations. You must have an amount of cash that leaves you calm in the long term, instead of being left with financial problems.
Step 4. Decide if you will buy a new or used vehicle
It is almost always cheaper to buy a used car rather than a new model. However, used cars generally accumulate more short-term and long-term maintenance costs. They are also less likely to include collateral, unlike their newer counterparts.
- Keep in mind that a new car will depreciate quickly and will lose some of its value almost immediately after purchase.
- Check online automotive forums and review sites to see if the type of car you are interested in has a tendency to have mechanical problems. You can also see how a car could maintain its resale value.
Step 5. Keep saving until you have enough money on hand
If you've set a budget and determined what kind of car you want, then it's just a matter of saving money. Eliminating small expenses, like eating out, can help you save some money over time. You can also pretend to make monthly car payments and instead send the money directly to a car savings account.
Step 6. Take into account the commercial or sales value of your current car
If you need extra cash, you can consider selling your vintage car or trading it in at a dealer, if you have one. Do some research online to see how much your car could be worth. You can wait for a private seller to give you the cash immediately, while a dealer could simply subtract the offer to buy from the total price of the new car.
If your car is an older model, you could make more money by selling it privately. Dealerships are often forced to put older cars up for auction, so they don't offer much for them in one transaction
Step 7. Compare the prices of the cars
Start your search for a car on the internet by looking at the websites of popular publications like "Edmunds" or "Kelly Blue Book." These sites will allow you to enter your location and view a list of vehicles that are available for purchase. You can also check the classifieds in a local newspaper or even visit a car dealership in person and look at their inventory.
- As you find cars that fit your criteria, write down the details and the price. Then you will get a clear idea of how much money you will need to buy the type of car you are interested in.
- Be prepared to exercise your patience, as it could take a long time to find a car that fits both your budget and your needs.
Step 8. Choose between buying from a dealer or a private seller
If you buy from someone, then they will expect you to pay the full price of the car in cash. Therefore, there will likely be little or no pressure to get a loan or try another payment plan. If you buy from a dealer, they will almost always accept cash, but they might try to direct you to other payment options.
Many dealerships make a profit by financing cars with loans from the same company. For this reason, they may be less than enthusiastic about accepting cash payment
Part 2 of 3: Make the payment
Step 1. Withdraw the cash from your account if you want a foolproof process
Once you've found the car you want, you may be able to withdraw the cash directly from your checking or savings account. It is important to consult the bank in advance about its withdrawal policies. Some banks have a daily limit on cash withdrawals or charge related fees.
Withdrawing money directly from an ATM is not a very good option, as the withdrawal amount usually has a daily limit
Step 2. Get a cashier's check from the bank if you want additional security
Go to the bank during regular business hours and follow the instructions to fill out a cashier's check request. The teller will verify if you have enough money in your account to cover the amount of the check. You will then withdraw that money and write the check. Later, you can transfer that check to a dealer or private seller to buy the car.
- Some banks charge an amount to prepare a cashier's check, but others will charge it for free if you are a regular customer.
- If you are not a customer of the bank, you can also hand over the cash and then request that the bank write you a check.
Step 3. Transfer the money from the bank if you want an instant payment
To complete a transfer, you must give your banking information to the dealer. Then they will transfer the funds from your account to theirs. Due to the intricate nature of this process, generally only large distributors will consider this option.
Please note that it is very difficult to reverse or refund bank transfers. Make sure you know all the details related to the purchase of the car before accessing the transfer
Part 3 of 3: Checkout
Step 1. You will probably complete the purchase paperwork at the dealership
Even if you pay for the car with cash, most dealerships will still need you to fill out a variety of personal documents for security reasons. Many of these documents allow the government to more closely track cash movements in transactions, such as car purchases.
The dealership may analyze your personal information through a government database to make sure you are someone they can legally do business with. For example, the "United States Office of Foreign Assets Control" publishes a list of people who are prohibited from making purchases with large sums of cash
Step 2. Talk to the dealer about tax requirements
Depending on your government, you may still have to pay taxes on some or all of the cash purchase. Discuss this with the dealer or seller before you buy. You can also speak with a tax professional to determine the best way to shop with cash.
Step 3. Don't fill out a credit application unless you want to
Some dealerships may try to pressure you to fill out loan documents, even if you've said you'll pay cash. If this happens, you can withdraw from the deal, refuse to fill out the credit documents or fill out the documents partially, but writing “Credit payment is not accepted. Payment in cash”on the signature lines.
Step 4. Get a clear receipt showing payment to both private sellers and dealers
In exchange for transferring the payment in cash, be sure to receive a receipt and documentation that clearly specifies that you have paid the entire balance in cash. This document should include all your information and that of the seller. This must be dated and signed by both parties.