Have you ever thought about whether you should save up first, just take out a loan, or just pay it off in full when you want to buy something? Say you want to buy a motorbike; would you choose to take out a loan from a leasing company, save up, or pay cash right away?

This kind of consideration is normal and even important before buying anything. That's because every payment option has its own pros and cons, so you have to think it through carefully.

So, which one is the best? Check out the full explanation below!

Pros and cons of paying in full

Buying something by paying in full has a few pros and cons. The first pro is that you won't have to worry about debt installments or the interest used to buy the item. The second pro is that you can immediately sell it, pawn it, or give it to someone else if certain things happen.

Take buying a motorbike, for instance. By paying for the motorbike in full cash, you can instantly get the BPKB, STNK, and other necessary documents. Then, if you suddenly need money, the motorbike or its documents can be easily pawned without any hassle. This is definitely different if you still have an outstanding loan.

The downside is that not all items can be bought in full, especially high-value items like a house, a car, or resources for a business. Therefore, the choice between credit or cash also depends on the value and purpose of the item; if it's high-value and used for business, then paying with credit might be better.

Pros and cons of saving up first

The second option is to buy something by saving up first. This option is great for items that aren't too expensive, are needed in the future, and might not have long-term benefits.

The benefit of saving up before buying something is that you won't have to worry about debt installments and interest, so you can avoid the stress of future payments. It's also often more satisfying to buy something you've saved for than to buy it on credit. As a result, items bought this way tend to be better cared for.

For example, after saving for 5 years, you finally buy your dream motorbike. Of course, you'll clean it regularly, diligently change the oil and gear oil, and not use it carelessly.

However, the drawback is that buying something by saving up first takes a long time. The price of certain types of items can also be higher by the time you've saved enough money to buy them. Think of houses or land, for example, which get more expensive every day. As for buying gadgets and motor vehicles, the price might actually be cheaper (depreciation), but once you've saved enough money, a newer, more sophisticated model might already be out on the market.

Pros and cons of buying on credit

Buying something on credit or debt isn't always bad. The advantage of using credit to buy something is that you can get the item faster compared to saving up for it first. The drawback is that you have to pay interest, which can make your total loan amount look bigger than it should be.

Therefore, this payment method is better suited for buying items that are “important,” needed “quickly,” and cannot be paid for by saving up first or with a lump sum of cash. For example, buying a house. A house is an important necessity because it provides privacy and protection from the weather and security. Buying a house often needs to happen “quickly” because house prices tend to rise, making saving up to buy a house often ineffective.

Other examples of items that can be bought this way are production resources, such as raw materials, machinery, or business vehicles. This is because these 3 production resources are important and needed quickly for smooth business operations.

There are many types of debt that can be used for business, including credit card debt. Honest offers a credit card with a 100 million limit that is suitable for starting and ensuring the smooth operation of your business. The Honest credit card is practical for paying various business needs, such as buying consumables (BHP), raw materials, and even buying gasoline for business trips.

This is because paying bills with the Honest credit card is very easy. You just enter the card details into the PPOB application, and every month, your Honest limit balance will automatically decrease to pay this bill.

Payments using the Honest credit card can also be free of interest and administrative fees, as long as you pay off your monthly credit card bill on time. The Honest credit card is a financial solution for smooth and controlled business cash flow.