Car: pay cash, or finance it?
The car costs the same either way; what differs is which of your money it occupies and for how long. Paying cash empties part of the reserve in a single month. Financing keeps the cash but adds a payment that runs for years alongside everything else you have planned.
What shapes the funding choice
- The purchase price, any deposit you pay, and the month the purchase actually happens.
- The interest rate, term and monthly payment of the loan in the financed variant.
- The accessible reserve left the month after paying cash for the whole car.
- What the un-spent cash would otherwise be doing in the financed variant.
- Running costs and any value path you assign the car, identical in both variants.
Same car, two funding methods
Change only how the purchase is paid for. Same vehicle, same purchase month, same running costs, same horizon — long enough that the loan is fully repaid in the financed copy, otherwise you are comparing a finished purchase against one that is still halfway through being paid for.
Then read both the month of purchase and the years after it. Cash leaves the plan with less to fall back on immediately; finance leaves a fixed obligation that has to survive whatever else those years bring, including the costs you have not modelled at all.
Questions worth testing
- How much accessible money remains in the month you would pay cash?
- Does the loan payment still fit if income drops for a few months?
- What is the cash doing in the financed variant, and over how many years?
- Would a later purchase month leave both variants in a better position?
How to read the result
Both variants use only the price, rate, term and running costs you entered. Worthifi does not know what the car will be worth later, does not include insurance, servicing, fees or taxes unless you add them, and models a loan only — leasing and operating lease are different contracts and are not represented here. This is a planning illustration, not financial, credit or tax advice.
How it works in the app
Model the purchase as a one-off expense — fund it from savings or investments for the cash path, or from a loan for the finance path, which creates a standalone debt. Compare which leaves more net worth by the plan's final year.
- Tap “Plan a big one-off expense” and enter the car's cost.
- Choose savings or investments as the funding source for one plan, or a loan for the other.
- Compare net worth between the two plans.
Model this yourself