Do I need a DAC?

Either, you purchase a good CDP ( good on board DAC), or a transport plus a separate DAC. You will be better served by the separate DAC, and a separate preamp. I would stay away from all-in-one components. If your concerned about the the expense of separates, get a good disk player like a Luxman, Rega Saturn, etc.

Well chosen components improve sound quality with cost. There is virtually no limit… think $50K per component or more. Ideally you get the best possible source: streamer (or old school transport)  - DAC, preamp, amp, speakers. This gives you the best possible sound. I started out at ~ $ 500 / component… I am now at $20K / component… each upgrade has been phenomenal and brought great joy to my life. 
 

So, yes, can you benefit from a better DAC, absolutely. A great streamer will give you as good of sound as your transport… and infinite access to music, better preamp and amp will improve all. 

With the budget you mentioned give Technics a hard look at the GU-700 and the SL-G700

@rocray 

Build your system to fit your tastes and desires. This is a hobby,not a contest. Enjoy the music first and foremost. 

Words of wisdom.  Too often it seems to evolve into a contest mentality. 

Charles

I had an Oppo 105D which had a very highly rated onboard dac.  I was loaned a schiit iggy dac, tried it and the soundstage and imaging improved greatly.  I bought it.