Financing or saving to pay cash?
March 22, 2019
Financing or saving to pay cash?
In Brazil, many people have the dream of giving up an expense, rent, buying the house they want, for example. However, with the high costs that the real estate market presents, many end up in doubt between financing or saving to pay cash, making matters involved in the business end up influencing the decision.
All consumers are aware that cash payment is always the best option than a financing or installment of a particular good or product. However, when the item under negotiation has a high price, such as a vehicle or a property, it is more difficult to see cash transactions, with more common installments.
Why does this doubt afflict both buyers?
Even if the vast majority of Brazilians keep in mind that the decision to finance the purchase of a property is much more advantageous than spending years saving to make the payment in cash, there is a great factor that must be taken into account before making the contracting of the financing, the addition of interest rates in the credit programs offered by the banks.
Brazil is one of the countries with the highest interest rates in the world, regardless of the Central Bank action or not, the rates charged by the banks are very exaggerated, especially if the profile of the contractor is not very good. Having a recent history of outstanding debts and delays in installments are factors that can directly influence the rates charged by banks.
Still, financing is widely used in other types of purchases, such as school supplies, for example, which can be even worse at the time of a new installment payment. Having an excessive amount of payables helps the payer to complicate himself financially, making him an underpaid.
Because of these many factors that the choice between financing or saving to pay cash is so recurrent in the daily lives of those who have plans to buy a house or a car.
In addition, there are other elements that influence the decision, such as:
- Financing time,
- Total value of property,
- Cost of entrance,
- Financial situation of the buyer, among others.
After all, finance or save money to pay for the dream house?
Regardless of the good that will be acquired, the buyer should keep in mind that there is no exact answer to that question since each case is a case, depending solely and exclusively on your situation. However, there are cases where funding can fit better than spending a lot of time collecting money to make a cash payment.
In purchases of durable goods such as residences and automobiles, financing through a personal loan, payroll or any other line of credit available is more usual. However, this type of business requires that the buyer has a value to give of input, that is, he must have a part of the value in hand to be able to parcel out the rest of the price of the good.
- The greater the amount available to give entry the greater the chances of it being able to reduce the value of the installments, the payment time and the interest applied in the agreement, giving greater power of negotiation to the applicant before the contracted financial institution.
- However, depending on your financial situation, choosing to save a little more is ideal. Even if you save only to enter and not the entire amount.
With unemployment on the rise, many Brazilians end up leaving for the informal market, making their income inconsistent. That way, it is better to collect money to get the full payment of the product, as it is not known how much it will have available in your budget all month, and it can end up making a debt that can not pay.
It is very important that the buyer is fully aware of his current financial condition, knowing full well choose between financing or saving to pay cash. Each case requires the interested party to know about their financial situation and whether the value of a particular type of property will fit into the monthly family budget.