 TITLE: Do You Need Credit to Buy a Car With Cash? CONTENT: Other Forms of Car Financing\n----------------------------\nAuto loans aren't the only alternative to paying for a car with cash. Leasing a car lets you drive the car of your choice as a kind of long-term rental—a typical lease term is three years, and you'll usually return it after that time is through. Since you aren't paying to own the car, monthly payments are typically lower than they would be on a loan to purchase. You drive the car only while it's new and (presumably) trouble-free. If you have enough cash on hand to purchase, you can lease instead and pocket the difference. The hitch: You won't build equity. At the end of the lease term, you either purchase your leased car, lease a new car or go carless.\nA car loan uses the car you're financing as collateral. If you default on the loan, the lender will repossess your car and sell it to help defray your outstanding debt. Alternatively, you can use an unsecured personal loan to fund a car purchase. But an unsecured personal loan is likely to carry a higher interest rate than an auto loan, and it still requires a credit check and loan application. Bottom line: A personal loan won't save you time or money versus on an auto loan.\nCan you pay for a car with your credit card? Here, there are a few considerations. First, a dealer may not want to run a credit card transaction that large. Merchants pay fees on credit card transactions, so your purchase could cost more than they want to pay. Second, financing a car on a credit card could be costly for you. Interest rates on credit cards are typically much higher than what's commonly offered on car loans. You may also lower your credit score by inflating your credit utilization, which is the percentage of your available credit being used by outstanding balances.\nOn the other hand, if your dealer is game and your credit limits allow it, you may decide to use a credit card to effectively pay cash for your car. Using your card to pay the dealer for your entire purchase lets you avoid going to the bank for a cashier's check or carrying around wads of cash. As long as you can pay off your balance immediately, it won't cost you money—and may earn you some valuable cash back or rewards from your card company. END