If you can afford it, buying a car with cash is normally the cheapest option. Now, if you can't afford to pay cash you can still finance your new car. When you finance a car, you'll have to meet certain obligations from the lender, like down payments, interest rates, and meeting monthly payments. Financing also means paying a lender monthly payment plus interest on the loan, meaning you'll end up paying more than if you paid cash. Your lender will also probably require comprehensive and collision coverages as part of the loan agreement.