When it comes to buying a new car, should you finance it or pay cash for it?  If at all possible it is better to pay for your new ride in cash.  This way you avoid paying extra in interest and finance charges.

It may seem like a monumental task to save up enough money to pay for a car in cash, but it can be done.  The first thing to consider when shopping for your new automobile is whether you want to buy new or used.  Do you really need a brand new car with all of the bells and whistles, or can you get by with a nice used car?  Many times you can find a nice used auto with low mileage that will get the job done.

The next thing to think about is how to save up for your new ride.  Once you decide on what type of car, price them.  If you plan to pay cash, this will not be a quick process, but having no car payment will be worth the wait.  Another way to go about saving for your car is to decide how much your budget will allow you to place in a savings account every month and let that number be your guide when looking for your new car.  Also think about all of the extra income you get throughout the year.  Do you get a yearly bonus, and what about that tax refund?  Saving all of the “extras” is a great way to get a jump start on your new car fund.

Photo Credit: Sxc