Paying cash for a car vs. financing

Does it make sense to finance your car when you have the cash to pay for it? This calculator helps you to determine which is best for you — financing or paying cash for a car. Paying cash for your car may be your best option if the interest rate you earn on your savings is lower than the after-tax cost of borrowing. However, keep in mind that while you do free up your monthly budget by eliminating a car payment, you may also have depleted your emergency savings to do so. Also, not every financial institution will offer you the same interest rate, and vehicle prices will vary. Educate yourself on the appropriate interest rate for you, and a fair car purchase price, as well as possible negotiation tactics.