The process of buying a car involves a few crucial steps. However, some critical steps must be completed pre-purchase. The steps that one needs to complete before the purchase include the following:
- Analysis of the financial situation
- The setting of a budget
- Listing down of required specifications
- Payment Methods
These are the four most essential steps that must be completed before a car is purchased. All these contribute to making buying a car simple and stress-free. Analysis of the financial situation helps decide the amount a buyer can spare for the car. Having a strict budget and listening to requirements gives the buyer an upper hand in price negotiations with the car dealer. 
After all this has been done, the most significant decision has to be made: the payment method. Selecting the payment method varies with the type of car one wishes to purchase.
Here are three ways to pay for a vehicle and their advantages and disadvantages.
Paying Cash
Cash is the most straightforward of the three payment methods for buying a car. To make it simple to understand, it is just like buying shoes or a burger. A customer pays and gets the item without any stress or difficulties.
Advantages
The main advantage is that people save themselves from monthly payments through this method, freeing themselves from the liabilities attached. It does not affect their monthly responsibilities, and their lives stay balanced.
Secondly, they must pay the exact amount, free of any interest. The addition of interests reduces the chances of reselling the car for profit. In addition to this, the reselling of the car becomes more accessible and more straightforward. The chances of earning profits are higher in this case.
Disadvantages
Everything has downsides, and even paying for a car directly with cash has disadvantages. Cars are costly. A person needs to work tirelessly for a long time to gather such a vast amount. Paying fully in cash takes a massive chunk of money from the savings, exposing an individual to the stress of emergencies. 
A car’s value depreciates yearly, which is not a good investment option. After four years, a car’s price drops to half its original price, which comes as a massive blow to the car owners at the time of resale.
Financing
The most common payment method for car purchases in America is financing the car by a third party. An external party, i.e., banks, financial companies, and credit unions, pays off the car dealer. It is a feasible method for many. Due to this payment method, many middle-class Americans can get a car.
Advantages
There are some fantastic benefits of getting a car financed. The financial balance is not significantly affected when a buyer uses someone else’s money to pay the car dealer. It helps maintain the lifestyle as only monthly payments have to be made.
Cutting out only a few expenses helps people pay off their monthly payments. The buyer becomes the car’s owner once the payments have been successfully paid. People with good credit scores can enjoy loans with lower interest rates. It gets easier for them to get loans on acceptable terms.
Disadvantages
Besides great benefits, there are some non-negligible disadvantages of financing a car. The very first drawback of this payment method is the interest rates. With financing plans, a buyer is liable for monthly payments and pays more than a car costs.
It is true that after ultimately paying off the loan, a buyer becomes its owner. But when these payments are completed, the car’s value drops to 50% of its original value. When reselling the vehicle, there are negligible chances of earning any profits. Things are worse for people with a bad credit score. They are unable to get feasible financial plans. Either they pay high-interest rates, or the payments are too large.
Leasing
The last payment option is leasing the car. It is a highly unpopular payment method in the United States. Its unpopularity is because a person cannot buy a car; instead, they are forced to rent it.
It is similar to financing, requiring a down payment followed by fixed monthly payments. Unlike financing, after the payments are completed, the buyer must return the car to the dealer or replace it.
An individual is not asked to pay the whole loan but only the depreciated value. It means that if a lease is five years and the cost of the car after five years equals 40% of the original cost, the buyer will have to cover only 60% of the actual price. 
Advantages
A buyer does not have to pay the whole loan to get a car on a lease, only the depreciated value. This makes the method one of the most affordable options. Also, the amount of monthly payments is much lower than in the case of a financed car. When the payments are completed, an individual does not have to stress about selling it off. They can return it to the dealer or get it replaced.
Disadvantages
Compared to other payment options, car leasing has minor disadvantages. The permitted period to keep a car by a lender is not more than three years, which forces an individual to change their rides. A significant downside to getting a car on a lease is the limited annual mileage, restricting a driver’s driving habits. If a driver goes over the limit, a high cost is imposed on them.
Making the Right Choice
The payment option depends entirely upon a car buyer’s budget, financial situation, and preferences. Few people can afford to pay with cash as it will eat a significant portion of the total savings, making the economic situation unstable. But it depends on the buying capacity and the mindset of the buyer.
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