If you have enough cash to buy a car outright but expect a significant repair expense soon, the generally wiser approach is to preserve liquidity by financing at least part of the purchase while keeping a buffer for the anticipated repair. Cash purchases eliminate interest costs but can leave you cash-poor when unexpected needs appear. Financing spreads the payment over time so your emergency fund remains intact to handle repairs or other near-term needs. This hybrid approach balances the cost of interest against the value of having accessible funds for unpredictable but likely expenses.

Execution details matter: if you finance, shop for favorable terms (low rates, short term if possible) and avoid over-borrowing against other assets. Keep the emergency buffer in a liquid, low-risk account separate from the car funds so it’s readily available when needed. If you can negotiate a low-interest loan or a short-term promotional rate, it may be an especially attractive option when paired with disciplined repayment. The behavioral advantage is also important: preserving a safety cushion reduces the chance of high-cost outcomes (e.g., using high-interest credit cards for repairs) and keeps your broader milestone timeline on track.