6 Steps To Paying Cash For A Car And 6 Reasons You Should


Cars are crazy expensive in this day and age, for this reason, many decide to finance a vehicle they are purchasing. However, some of you worthy savers and those who purchase within their means want to pay cold, hard, cash for your vehicles. Responsible buyers, I commend you! 

Whether you are rolling in dough and can afford to buy a brand new car from a dealership in cash or you have a more modest background and simply choose to buy a lower priced vehicle in cash because you view it as the responsible thing to do, great job! There are so many reasons to pay cash for your vehicle and avoid taking out debt. 

Yes, paying cash for a car is great, but how to actually do it? 

Steps To Paying Cash For A Vehicle

  1. Decide what you can afford (remember taxes and fees)
  2. Save if you need to
  3. Move funds from other assets to a more liquid form
  4. Talk to the dealership or private party seller on how they want to be paid
  5. Negotiate
  6. Sign the title

Deciding What You Can Afford

The obvious first step in paying cash for a vehicle purchase is deciding what you can and cannot afford. Evaluate your options and decide if you plan on buying a car from a dealership or from a private party seller. This is crucial because cars purchased through a third party seller such as someone selling their personal vehicle on Facebook Marketplace are going to be far less expensive than comparable vehicles listed by a dealership. 

Dealership vehicles generally come with some form of warranty and they are mechanically checked over. Dealerships buy cars for cheap and flip them for a higher price. If you cut out the dealer you will definitely be saving money not just on sticker value, but on dealership fees which are usually somewhere between $500 and $1000 depending on the dealer. Don’t worry about the warranty offered by the dealership, you can buy one later and it will cost you less than the difference between the dealership vehicle and the private party sale vehicle. We’ll give you more info below.

Decide what body style of car you want and shop around to find cars you believe to be in your budget. Keep in mind that you will pay up to 10% in taxes as well as an additional $500+ to register the vehicle after you’ve bought it. The final thing to keep in mind is how much it will cost to insure the vehicle. 

Save If You Need To

If you don’t have the cash on hand then you will have to save up to pay for a car. This goes without saying. Put yourself on a saving plan and squirrel away money every month to save up. If you have additional items in your budget that you can cut, do so to save up more quickly. 

Move Assets Around To Get Liquid Funds

If you don’t need to save, but will be liquidating other assets to purchase your car, consider doing this several months in advance to avoid any snags in your plan. Moving money around can take longer than you anticipated and you don’t want that to impede your schedule. 

Determine How The Seller Wants To Be Paid

If you are planning on buying from a dealership they will generally want to be paid via a card transaction or cashiers check. Call a few days in advance of going to test drive the vehicle you are interested in to see what forms of payment they accept so that you give yourself the time to ensure your funds are in the right place and you have everything you need. 

Please keep in mind that some of your accounts may have a maximum daily spend limit! I myself have run into this issue with some of my smaller accounts. Call your bank ahead of time so that you don’t find yourself in a bad situation.

Private party sellers may be more lenient about forms of payment that they are willing to take some will accept venmo or cashapp. Talk to the seller and come to an agreement on what works best for you both. Whatever you choose, we don’t advise rolling up with cash in hand. That is a fantastic way to end up getting robbed. 


Negotiation is a huge part of car buying. Regardless of who you buy from you should be sure to haggle on the listed price. Of course if someone is offering you a killer deal then maybe consider taking their offer. Some sellers do list their vehicles and specify that the price is firm. Dealerships you should always negotiate with because they never offer up their firm price initially. Know that you are likely better off negotiating with a 3rd party seller. Here is why:

Negotiating Advantages Of Buying 3rd Party

When you go to a dealership, odds are that you are out of your league. Car dealerships sell cars professionally. That is essentially all they do. Even a newer salesperson you may be interacting with has sold over 10 cars. You on the other hand have likely bought or sold under 5 cars. This gives the dealership the advantage of expertise and experience. 

If you choose to purchase your vehicle from a private seller you will likely be much more evenly matched as it is likely they have also bought or sold under 5 cars in their lifetime. This means that you are much less likely to get taken advantage of by a third party private seller. 

Sign The Title

The final step is to sign all necessary documents including the title and bill of sale. Fork over the cash and grab the keys. 

6 Reasons To Pay Cash For A Vehicle

  1. You’ll spend less on the overall cost of the car
  2. You’ll save money by avoiding interest
  3. No monthly payments 
  4. Greater negotiation power
  5. No need for financing approval
  6. You’ll only buy what you need

You’ll Spend Less Money On A Car

Emptying your savings account is not easy, especially considering that vehicles are such a significant purchase. In addition, cars are depreciating assets which makes it even more difficult. When you choose the option to put yourself in a hole by financing a car it makes it far easier to justify spending more money and getting all the bells and whistles on a new vehicle. Psychologically, you are likely to spend far less money on a vehicle if you have to pay for it out of pocket. Especially considering that for most people that is likely your rainy day slush fund. 

Save Money By Not Paying The Premium For Financing, INTEREST!

It’s no small surprise that financing a car is also expensive on top of making people willing to spend more than they should on a vehicle they can’t afford. Most Americans are in significant debt. On their cars, on their houses, in credit cars. Most of the spending practices Americans utilize are just a “keeping up with the Joneses’” style of spending. Meaning it is unnecessary and wasteful spending just to keep up with appearances. 

With a traditional interest rate of around 6%, if you buy a car for $24,000  you will pay over $30,000 for the vehicle by the time you make your last payment to your lender. What could the average American do with 6K? Well for one they could stop living month to month on their bills. The longer the payback period on the loan and the higher the interest rate, the more money you are going to pay. 

You Can Find Heavy Discounts When You Pay Cash

This perk will depend on the buying route you end up choosing. When it comes to private party car sales, just about every car owner is going to be asking cash for their vehicle. If you want to go out and get separate financing for the car that is something you can do, however most car buyers of third party sellers opt to pay cash out of their own accounts. 

On the other foot, some dealers are willing to offer a lower price for cash buyers because they don’t have to deal with the financing companies which saves their employees time and the business some money. 

One thing is for certain, you open many more doors for yourself by having cash on hand ready to go. 

Financial Discipline

They say that it only takes one smart decision to put yourself on the path to financial freedom. Paying cash for a vehicle and only spending what you can afford without taking on new debt is an exceptional example of this law. Stop living month to month because you have so many recurring monthly bills like car payments and subscriptions. Improve your financial health by instead putting that cash toward savings, investments and retirement. It can also help you prioritize your other financial goals at the same time, especially if you’re dealing with credit card or student loan debt.

Establish Priorities

Paying for a car strictly with what you have on hand also makes you think about what you truly need out of a car. Sure you probably aren’t buying the latest and greatest but I can assure you that whatever car you buy, you are making dang sure that it is going to last and accomplishes your goals for it. You may have to forgo the sunroof or the leather seats but you’ll likely buy a brand that will last. 

Never Stress Out Over Car Repairs Again

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Car repairs can be absurdly expensive, and you can expect those unexpected repairs before too long no matter what vehicle you drive. 

If you have to replace the transmission in your car  it could cost you more than $5,000 

Depending on your vehicle it could cost you up to $10,000 to replace the engine block.

If that seems absurd to you, luckily you aren’t alone.

A vehicle service contract from Protect My Car can help cover the cost of these excessive repairs. In fact, you could pay as little as $100 dollars for that $5,000 transmission replacement.

Yes, you heard that right.

For less that the cost of a cup of coffee each day, you can get coverage for:

  • Steering
  • Suspension
  • Engine
  • Transmission
  • A/C and Heating
  • Navigation and Electronics
  • …and so much more.

When you walk into the repair shop with a coverage plan from PMC, you can rest assured that you will never pay for these repairs listed here. You pay a $100 deductible, just like insurance and we pay the rest.

Does that sound like a fair deal to you?

If it does, just fill out the form below for a free quote, and see how great it can be to never have to pay for car repairs ever again.

About Protect My Car

Protect My Car is an extended auto warranty company. Our goal here at Protect My Car is to eliminate your worry of being financially responsible for an expensive mechanical breakdown. With our extended auto warranty, you don’t have to worry about being fully burdened with the cost of a covered repair.