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What is Cash Buying?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 25 August 2016
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    Conjecture Corporation
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Cash buying is all about purchasing securities and commodities outright, rather than arranging some type of financing as part of the acquisition. Once considered the only way to acquire commodities, cash buying lost a great deal of market share to purchasing on credit, but that trend has shown signs of reversing in recent years. There are actually a few advantages to the outright purchase approach that may be very attractive to buyers who have liquid assets on hand.

One of the great things about cash buying is that the satisfaction of the buyer is immediate and complete. There is no need to schedule some future date for the completion of the transaction. As soon as the cash payment is rendered, the seller will issue proper documents to effect the transfer of ownership at once. The new owner is immediately free to do anything he or she wants with the commodity or security, including turning around and putting the asset up for sale.

A second advantage to cash buying is that there are often less charges associated with the completion of the transaction. There are no interest payments to be considered, and no fees involved in arranging for other modes of payment. In addition, some sellers will offer a cash discount if a buyer is willing to render payment in full in the form of cash. This can lead to additional savings that will help to make the business deal that much more attractive.

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Last, the buyer who prefers to deal in outright purchases never has to be concerned about failing to meet a payment date in the future. Since the asset was paid for at the time of acquisition, there are no payments pending. Thus, the opportunities for late fees or other penalties are completely eliminated, and the buyer can enjoy the security or commodity with no worries about pending indebtedness related to the asset. The simple peace of mind that can come from a cash buying approach may not be tangible, but it is one factor that is important for many investors.

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