Of late, financing has become a highly prevalent trend in our society. It is an effective substitute for making cash payments, and gives you an option of paying back the entire amount over a period of time by making small payments. Car financing is one of the most popular financing options people go for. Auto loans are even endorsed by dealers as they earn commission or kickbacks when you get a loan on their recommendation. Buying a brand new car with your cash is not something dealers are too excited about. But for you, it is the more obvious and logical choice, as you do not have to pay any extra money other than the car cost and there is no financial burden on you as well. Hard Cash Vs. Financing This is a valid point of debate in the minds of most people looking to buy a car. Giving this dilemma a cursory thought will convince you that buying a new car with cash is obviously the better choice, as you would not be paying any extra money for buying your car in the form of bank interest. You just pay the amount for the car and your job is done. However, when you analyze the situation in a detailed manner, there is really not much of a difference in either of the two choices. Auto loans usually come with a 7% APR, and need to be paid off within 4 to 5 years. If you have cash amount for your car lying with you in the bank, and you have an investment opportunity which could yield you 9% to 10% interest, then smart decision would be investing your money and buying your car through auto financing. Cash payment works for people with excess money. Also, another advantage is that there is no psychological burden on you of being under debt or having to pay money every month towards loan payments. Buying a New Car With Cash Do Your Homework Before visiting your car dealer, figure out which car you are interested in. Do some online research, ask friends or family, compare prices, features and go through all available options before you zero-in on the car of your choice. Once you are sure of what you are looking for, car buying becomes easier at the dealer's office. While you are at the dealership looking at cars, do not let the salesperson know immediately that you are looking for a cash buyout. He will surely probe you about how you wish to pay for the car. You can tell him that you will decide the mode of payment once you like a car. If you have done your research and decided the car you want to buy, test ride it and go through its features. Keep it Confidential There is a reason behind not letting the dealer know about your cash buying intentions. Dealers earn more money if you let them know about the cash buying, they will know they are not getting any extra income in terms of interest payments or recommendation fees from the auto financier. So dealers will try to cover up this margin in the car price, and you will end up paying more. Play your cards close to your chest, and disclose your secret only after you have negotiated the price. Negotiate the Price Once everything regarding car selection is done and you know the cost, talk to a senior person in the dealer's office about your intentions. Tell him you have the money and will purchase a car right away if he gives you a great price. There is a certain amount of discount for cash payments which you need to extract from the dealer. Let him know that you will drive home the car the next day, which gets him the opportunity to clear out one car from his lot quickly. To sum it up, buying a car with cash is the better choice, unless you have a better investment option and extra income which will take care of the loan payments. So, keeping that in mind, take your decision wisely.