Buying vs. Financing A Used Vehicle

Businessman sitting at the desk with colleagues and signing contract on the meeting

Should You Buy With Cash or Finance A Used Car?

When it comes to used car shopping, the decision-making process can be as diverse as the makes and models available on the market. Choosing whether to finance or buy a vehicle outright is a common dilemma that many car buyers face. Read on as our automotive finance experts here at Key Auto Group explore the pros and cons of each option so that you can make the best decision for your lifestyle and budget.

Read More: 

Lease or Buy? 

Why Finance Your Vehicle With Key Auto Group?

Buying a Used Car with Cash

So you’ve saved up enough money to buy a used car with cash, good for you! That’s no small feat. Before you go ahead and spend all of your hard earned funds, consider the following pros and cons:


  •  No Monthly Payments: One of the most significant perks of buying a used car outright is the absence of monthly payments. Once the transaction is complete, you own the vehicle free and clear.
  • Total Cost Savings: Purchasing a used car with cash can save you money in the long run. You avoid interest payments, making the total cost of ownership lower compared to financing.


  • Draining Savings: Buying outright requires a substantial upfront payment, potentially depleting your savings. This may limit your financial flexibility in the short term.
  • Limited Car Options: Depending on your budget, paying in cash may limit your options to older models or vehicles with higher mileage.

Financing a Used Car

Now that you understand the pros and cons of a cash purchase, it’s time to discuss the advantages and disadvantages of used car financing.

Key Advantages:

  • Preserve Cash Flow: Opting for financing allows you to preserve cash flow by spreading the cost over monthly payments. This can be beneficial for those who prefer to keep a cushion in their savings.
  • Access to Newer Models: Financing opens the door to a broader range of used cars, including newer models and those with additional features.
  • Build Credit History: Making timely payments on a financed car can positively impact your credit score, potentially improving your financial standing for future purchases.

Potential Drawbacks to Consider:

  • Interest Costs: Financing incurs interest, increasing the overall cost of a vehicle. By financing a car at one of our Key Auto Group dealerships, you gain access to our relationship with major Canadian banks and financial institutions, offering the best interest rates to minimize this expense.
  • Loan Terms & Depreciation: If your loan term exceeds the vehicle's depreciation rate, you may find yourself owing more than the car's value, especially in the early years of ownership.

Ultimately, the decision between buying and financing a used car boils down to personal preferences, budget constraints, and future financial goals. Whichever path you choose, our team is here to provide expert guidance on your automotive journey. Get in touch with us, today!