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Uhtred
LSU Fan
Bebbanburg
Member since Sep 2018
135 posts
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Finance a car? or pay in cash?
What would be your threshold for paying for a car outright vs. financing it?

Is it ever a good idea to pay for a car in cash?

What do the Money Talk experts think?


castorinho
Oklahoma Fan
13623 posts
Member since Nov 2010
61897 posts
 Online 

re: Finance a car? or pay in cash?
quote:

What would be your threshold for paying for a car outright vs. financing it?
what rate can you get?
quote:

Is it ever a good idea to pay for a car in cash?
depends.
If you can get a low enough interest rate, then it's a matter of personal preference. If you can't get a low interest rate, then you should pay cash. But then again if you can't get a low rate, the odds of having enough cash for the purchase are low.


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140
yatesdog38
Mississippi St. Fan
in your head rent free
Member since Sep 2013
8228 posts

re: Finance a car? or pay in cash?
cash if the VIN numbers are scratched off and there isn't a title.

sorry if this feels like a troll, but need more details... a carload more. What type of car... new, used? How is your driving record? outright title and you will likely have lower insurance rates. who much will this affect your debt to income ratio.

I'd recommend buying a more expensive car like a buggati and never driving it putting it in you temperature controlled car collection parking garage... 30 years from now it will be worth 10 times as much
This post was edited on 9/13 at 1:48 pm


Uhtred
LSU Fan
Bebbanburg
Member since Sep 2018
135 posts
 Online 

re: Finance a car? or pay in cash?
quote:

What type of car... new, used?
not sure yet. nothing fancy, though. i view automobiles more for function over fashion. pricing probably in the 30 - 40k range.

quote:

How is your driving record?
haven't had a ticket in 12 years

quote:

who much will this affect your debt to income ratio.
not much


I'm just curious. I hear people discussing the merits (or bragging) about paying for a car with cash. But I think the money invested will earn more over the 3-5 years relative to the rate of the loan... therefore, it may not be worth it to pay in cash.

I've never been fortunate enough to have this decision to make before. So I'm in unchartered territory here.
This post was edited on 9/13 at 1:58 pm


Fat Harry
Tulane Fan
70115
Member since Mar 2005
1632 posts

re: Finance a car? or pay in cash?
I like doing 3 year loans at 1.99% through Jefferson Financial. Makes sense to me.


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40
hungryone
LSU Fan
river parishes
Member since Sep 2010
9692 posts

re: Finance a car? or pay in cash?
Financed the last two though I could have paid cash. One was a zero percent deal through VW. Not gonna turn down free money! Other one was 2.3% through USAA, for a 36 month loan I paid off in 24. For the very small amount of interest I paid, it was nice not to pay for the whole thing upfront.


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23
Negatiger1986
LSU Fan
Inside the Leather
Member since Sep 2010
283 posts

re: Finance a car? or pay in cash?
I paid cash for my last car but think of it as "self-financed". I calculated the 60 month payment schedule using a 6% interest rate and set the auto transfer to my brokerage account for the 15th of every month. Sure the rate is above market but I get the benefit. And it prevents me from feeling like it is "paid off" because I've only paid myself back about halfway at this point.

I know I'm playing a bit of a mind game with myself and that this is essentially a self-enforced savings plan. But if you have the cash and don't see any other attractive investments, this could get you over the mental hurdle of buying a depreciating asset vs making an investment.


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30
yatesdog38
Mississippi St. Fan
in your head rent free
Member since Sep 2013
8228 posts

re: Finance a car? or pay in cash?
take the 40 grand put it in something high risk like Prospect capital PSEC and use the dividends to pay for a lease. :)

just kidding this is all really a subjective thing. Some people hate debt. Some people are great with it. If you can get like 2% like someone else mentioned that is dirt cheap finance the shite out of it.


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yellowhammer2098
Alabama Fan
New Orleans, LA
Member since Mar 2013
3798 posts

re: Finance a car? or pay in cash?
My main issue with financing a car is I feel it generally leads people to spend more than they need/should.

The interest on auto loans is generally low enough that they make sense so if you're trying to decide between taking $30-40k out of stocks/savings and paying cash vs. financing, go for financing if you can get a good enough rate. If you're trying to decide between spending $20k on a car in cash or putting $20k down on a $60k car and financing the $40k, I'd go for the cash option at $20k.

If I can't buy a car in cash, I'm not going to buy it. That doesn't necessarily mean I'm going to pay in cash though, if that makes sense.


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Huey Lewis
LSU Fan
BR
Member since Oct 2013
2845 posts

re: Finance a car? or pay in cash?
quote:

If I can't buy a car in cash, I'm not going to buy it. That doesn't necessarily mean I'm going to pay in cash though, if that makes sense.


This is my sentiment as well.


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30
Powerman
LSU Fan
Virginia
Member since Jan 2004
139384 posts

re: Finance a car? or pay in cash?
quote:

i view automobiles more for function over fashion

quote:

30 - 40k range.



Uhtred
LSU Fan
Bebbanburg
Member since Sep 2018
135 posts
 Online 

re: Finance a car? or pay in cash?
I have a family. Look up prices for a Honda Odyssey, haha


Popths
LSU Fan
Baton Rouge
Member since Aug 2016
1974 posts

re: Finance a car? or pay in cash?
Since becoming debt free, I only pay cash. Money in the bank doesn’t make enough to worry about plus interest is not tax deductible. I don’t buy crazy priced vehicles. Goes against my grain. I try to stay under 40k.


ScaryClown
Member since Nov 2016
5847 posts

re: Finance a car? or pay in cash?
I’ve never financed a car that didn’t have 0% financing. Not sure why anyone would ever pay interest on a car.


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31
lynxcat
Rutgers Fan
Member since Jan 2008
20531 posts
 Online 

re: Finance a car? or pay in cash?
quote:

Powerman


$30-40K isn’t a crazy amount for a vehicle. Yes, there are always cheaper options but that’s not an unreasonable range.


Powerman
LSU Fan
Virginia
Member since Jan 2004
139384 posts

re: Finance a car? or pay in cash?
quote:

$30-40K isn’t a crazy amount for a vehicle.

Oh certainly not for a new vehicle

10 years ago you could make that claim but now it's tough to find a family car under 30K


Popths
LSU Fan
Baton Rouge
Member since Aug 2016
1974 posts

re: Finance a car? or pay in cash?
Pay cash if you can


Double Oh
Louisiana
Member since Sep 2008
8927 posts
 Online 

re: Finance a car? or pay in cash?
I cant stand a cra note so i like to pay in cash if i can.


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