Paying cash for your next car probably sounds like a good idea. You write a check and you walk out with a car, no monthly payments. But that isn't necessarily the best option for you. We'll go over financing and paying cash to help you determine which option to use when paying for your next car.
When you finance a car that means you take out a loan against the value of the car and pay it off over time. Paying in cash allows you to purchase the car outright with no other payments necessary. One advantage to financing is that it allows you to purchase a nicer car than if you're paying with cash unless you have a large sum of money saved up. A disadvantage of financing is making monthly payments with interest.
Purchasing a car with cash is generally preferable because you avoid monthly payments and paying more due to interest. But, if you qualify for a very low interest rate you will lose very little money to interest, so financing would still be a good option.
Whether you decide to finance or pay cash, make sure to shop around for the best deal!