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Before you decide how much cash you want to spend on the car, however, you should ask yourself what you are sacrificing in order to purchase that car with cash. Maybe you need to pay for new storm windows, so should buy a used car. Or should you forgo the car for a few more years until your kids are out of college? For most car buyers who can afford to pay cash, they do not have enough cash liquid. Instead, they have to cash out an investment or pull the money out of an account that may have a penalty. It is also possible that the cash you spend on that car could offer more investment opportunity elsewhere, particularly when you weigh it with some of the low rate auto loans dealerships are offering right now.