If u saved enough money to pay cash for your car,

[lisaross]

did u pay in full, or did u finance?

I am hoping to get a new car the end of this year - been saving for many many years and should have enough or just a couple thousand short.

I'm wondering if i should finance it anyway..the finance rate should be about 1.9 for 3 years! this way i can just take the money out of the "Car" account each month!

what did u do?

 

[Kitzka]

We paid for the car in cash. we saved for 10 years and have enough for 2 new cars. got one last july and will get the other this december when the 2nd car dies. both cars were purchased new with cash 10 years ago. we pretended we had a car payment and put that money in an account.

some months if we needed it we used it for other things but it was wonderful to pay in cash.

lara

 

[monkey30]

I would pay in cash, why pay someone else finance charges.

I did learn though never tell them up front that u are paying cash, just when it comes time to wheel and deal and payments then u tell them u are paying cash, I say if they dont ask dont tell till they need to.

Good luck! I hope u find something you will really enjoy!

 

[pyrxtc]

pay for it with a really good credit card that gives you cash back or something similar and then pay off the card in full. Why finance if you don't have to?

 

[TnTWalter]

For my van, a couple years ago...we wrote a check. It was a great deal for them on a van that had been sitting and a great deal for us as it had been sitting and we were able to get it for quite a bit less than the kbb value.

Nothing like doing all the negotiating and then asking 'do you take a check?' Good feelin.

With hubby's truck it was not a dealer and he met him at the bank where the title was held [the seller owed money still] so he met him with a cashier's check.

 

[sweetsusannah]

We paid cash for our last 2 cars. I agree not to tell them you will be paying cash until you have to. Dealerships make a good deal on that financing. We ended up with great deals but were told that paying cash was not a good thing in the eyes of the dealership.

 

[akcire]

Our last car purchase we leased our car for 3 months and then paid it off. It is a long story, but GM was offering a "Smart Lease" which allowed for a $5500 price reduction if you guaranteed to lease the car. The lease had no prepayment penalties, but did have an 8% interest rate. We wrote a check for as much of the purchase price as we could, and still qualify for the lease. We then "leased" the car for 3 months, the minimum stipulated in the contract; before we sent them a check for the full amount.

It was actually the salespersons idea. Ultimately we paid about $120 in interest for a $5500 reduction. We also qualified for a bunch of other rebates and dealer cash at the time. This car ended up being a fabulous deal.

If the sales guy did not point out this advantage to us, we would have just written a check for the full amount.

Thank you GM marketing department for the "Smart Lease" idea!

 

[ssawka]

It depends on what else you owe. If you owe something with a higher interest rate pay that off first, but only if you could still make the payments if something happened. For example when we bought my car, we still owed on our DVC loan. Instead of putting any cash down on the car, we used the cash to pay off the DVC loan (10.75%). Now some may say that's risky since DVC is a luxury and the car is a necessity, however I felt pretty confident in my career. I guess what I'm trying to say is if you have no other debt, pay cash, but if you do have other debt the interest on a car loan is pretty low.

 

[linnell]

I agree, why have a payment when you don't have to? Pay cash, and then you own it outright. This is better too in case of an accident, because if your car is totaled then half the money will go to the bank.

 

[photo_chick]

I will never, ever have another car or credit card payment again. If you can avoid financing and pay cash, do it.

 

[HeyIt'sMe]

My MIL recently traded in her van for a new car. She had the money to pay the balance after the trade-in. She wasn't going to finance the balance but the salesman told her she's get another $500 off if she financed the balance. He told her she could turn around and pay off the amount financed; even if she had to pay a few dollars in interest she'd still be ahead by saving $500. She paid of the balance a couple weeks after buying the car.

Who knows - maybe it was a lamo sales tactic?? I hate car shopping!

 

[lisaross]

There was a sign that said 3000.00 is the most u can put on a credit card!

I have no other debt (except for my mortgage) - i guess i should pay cash - its just so wierd to think of handingthem a check for 25,000! A friend mentioned financing it so it builds your credit..

thanks for all the replies!

 

[princessmorgan]

The most we could put on a credit card was $5000, so we put that on our Disney Visa. Then we paid cash for the rest. We just bought the new car in March. If we didn't have enough money for emergencies somewhere else, then I probably would have financed it because the interest rate was .9%. DH just got laid off last week. We should be fine for awhile, but if times get tough, then maybe I will regret the decision to pay it all in cash.

 

[neatokimmo]

I have the cash but will finance at 2.59%, my going CU rate. I can make more investing it.

Think of it this way, if you are in the 20% tax bracket and you aren't maxing out your 401K for the tax benefit...that is a pretty big lost opportunity cost.

 

[smokeyblue]

If you can get a loan at that rate take it! Invest the cash. I'd split it up between easily liquidated investments and long term investments that have a higher return.

Life is unpredictable, its better to have liquid assets instead of throwing your money into an investment that is going to depreciate by thousands the moment you drive it off the lot. If life throws you a curveball you aren't going to get a loan for that rate.

 

[neatokimmo]

If you can get a loan at that rate take it! Invest the cash. I'd split it up between easily liquidated investments and long term investments that have a higher return.

Life is unpredictable, its better to have liquid assets instead of throwing your money into an investment that is going to depreciate by thousands the moment you drive it off the lot. If life throws you a curveball you aren't going to get a loan for that rate.

 

[Dacky619]

Obviously it depends on a bunch of situations. When I bought my new car, I financed because I got a very low %. A year later when we bought DW's new car, we paid cash, but we were able to use that as a negotiating tool. The up front cash payment knocked an extra $2000(ish) of the price of a new car.

 

[crjack]

We just bought a new car and put down a large deposit and financed the rest. Honda was offering 0.9% financing so we decided to take advantage of it.

Our $$ isn't earning much these days but it is earning more than 0.9% and I feel better having a larger savings account in case of job loss, etc. We do have other savings, etc but the monthly payment is well within out normal budget so I'm fine with having the short term loan. I keep my cars for a very long time so I'm not as concerned with the depreciation as I am with long term reliability and cost of ownership.

Most dealerships cap what you can put on a card but we did put the max allowed on our Am Ex for the points.

 

[ilovemk76]

We paid in cash. The dealership is buying down the loan so you will pay more for the car. The lienholde can dictate your insurance deductible. We have $1000 deductible on our cars. I know people who carry $100 because that is what the lienholder wanted. This results in higher premiums.

 

[Swimalie]

We wil be paying with a check for our new Forester on Saturday. This will be our 3rd car that we have paid in full for. We have been putting money in to an account for the last few years so that we didn't have to finance. Once it came time to buy the car we considered financing the car through a credit union or the dealer (1.99% for 3 years as well) and realized it was like throwing money away. So we're paying in full. And we'll keep putting that money in to savings that would have gone towards the car. If you have the money and it won't totally drain your savings, I'd pay cash. But make sure you have enough in savings left over in case something does happen soon after.