Should You Finance a Used Car If You Can Pay Cash?

Illustration for article titled Should You Finance a Used Car If You Can Pay Cash?
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As Jalopnik’s resident car buying expert and professional car shopper, I get emails. Lots of emails. I’ve decided to pick a few questions and try to help out. This week we are discussing when you can get a deal on the new 2020 Chevrolet Corvette, saving on the destination fee and whether it’s worth financing a used car.


First up: is it worth financing a used car if you can pay cash?

In the market for a larger vehicle (currently drive an Impreza 2.5i) and looking for a 2016-2017 manual Forester. I have the cash to buy a car outright - my question is, is it worth the hassle to finance if rates are low?

Typically, used car interest rates aren’t super low like the zero percent or 1.9 percent specials you see on new cars. The average used car rate for someone with good credit hovers around five percent, which isn’t bad but not amazing either. A good credit union may be able to get that lower.

There is certainly freedom in paying cash and not having a car payment, but if you think you may need some of that money as a rainy day fund, perhaps try to find a competitive rate and use a really big down payment. That way you have low monthly payments but still some cash in the bank.

Also, it’s generally not worth blowing a huge chunk of your savings just to avoid a car payment, unless the spend really won’t dent your bank account that much.

So now that the mid-engined Corvette is here, how long will it take to get a decent deal on one?

I am very interested in the new Corvette C8, despite the fact that you can’t get a manual, but I certainly don’t want to pay full sticker price or even a markup for this car. Usually the first batch of cars go for a premium but how long will it take to get one with a decent discount?


This is a difficult one to predict with 100 percent certainty. I am sure there will be some cases in which early C8 buyers got a discount thanks to having a relationship with a dealer. However, generally speaking, the first few months after the cars hit the lots tend to be the most expensive for buyers as the supply and demand economics favor the dealers.

Once you get to the the point where inventory is building up and the sales aren’t as hot, that’s when the discounts and rebates start happening. This time frame is usually around 9-12 months after the launch. That being said, demand for the C8 could be hotter than anticipated, therefore prices could stay firm for awhile, though this is unlikely.


Your best bet is to either wait for a model year changeover (Chevy has historically thrown a lot of rebates on the hood to get the older cars off the lots) or wait a few years for the used ones if you can be really patient. The C8 isn’t going to be some limited-production car, and Corvettes depreciate fairly steeply.

There will come a time when you will be able to buy an American-made, mid-engined supercar in the $40,000 range, and that’s awesome.


Finally, is it possible to forgo the crazy destination fee if you pick up the car yourself?

Can I avoid a new car destination fee by simply picking it up at the factory?

I get it, destination fees suck. And in recent years they have been rising mainly due to the fact that cars are getting bigger, therefore you can’t fit as many on a truck. The destination fee covers the manufacturer’s cost to ship the car, but it’s an “average”—some cars ship long distances some don’t go that far, but if everyone pays the same regardless of location it evens out.


But you can’t just roll up to the factory and avoid the fee. That’s not how it works; you still have to buy a car from the dealership. Don’t get caught up in the destination fee, just focus on the total out the door price.

Got a car buying conundrum that you need some assistance with? Email me at

Tom is a contributing writer for Jalopnik and runs He saves people money and takes the hassle out of buying or leasing a car. (



Great advice on paying in cash. If you can do it without making a huge dent in your savings, do it. Or, like you said, get a great APR and put a sizable down payment on it. Cash is not always king. Have a rainy day fund.

*Prepares for the Jalop “IF YOU CAN’T PAY CASH, THEN DON’T BUY IT!” rants.