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

[Swimalie]

You're paying $25,000 for a $22,000 sticker price? Depending on your sales tax rate, that's either a bad deal or a terrible deal. Run away from that.

The 25,000 is the car I'm buying. Same car that Lisa is buying. I got mine for $26000 with a sticker price of $2840 below sticker price. And actually, I checked Costco's on line form yesterday and put in all the extras we're getting except the trunk cover (it was listed as an option) and we got the car below what Costco says we should be paying.

 

[DVC-Don]

I'd pay cash unless I could get 0% on a loan.

 

[Jeff_G]

I paid cash for the last car, will pay cash for the next on. You also need a 6 to 9 (or 12) month emergency fund.

 

[KerryCM]

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?

Most dealers will not accept credit cards for payment. The CC companies charge too much to process the charge. We have tried this at a couple Chevy dealers. We always pay cash, don't want them to get any more money than necessary.

 

[bumbershoot]

I could care less what the dealership thinks of paying cash for a car.

You were responding to someone explaining why you don't tell the dealership that you're not financing. They weren't saying TO finance, just explaining why.

If you tell them you're paying cash before working out a price, they are going to come up with a higher price than they would if they thought you were financing.

I think you know that, because you said you do just that, but that's why the pp explained it, for those that don't know it.

 

[SleepyatDVC]

We paid for our first car in 2000 in cash, with the down payment by CC. We still have that car and it looks and runs like new. My DH drives it.

This time (2010) even though we had the money to pay for my new car in full, I put the largest amount they would let me on a CC, paid another $10K by check, then financed the rest. I think I got the same 0.9% Honda financing that someone else mentioned.

My monthly payment is less than most people's cable or cell phone bill. Better yet, we don't have cable at all and just get Netflix streaming.

But I am adding extra into the monthly payments so it will get paid off much sooner.

The extra money saved up is already still sitting in the bank, ready for our next car when the kids are old enough (12/11 now) or as extra EF. I am one to enjoy having extra EF above and beyond what is needed. We actually had already saved up enough for a more expensive car but I opted for a less expensive commuter car and so have quite a bit in the account.

I am paying the car payments out of monthly income and don't even miss it. If there is a worse case financial scenario, we can either pay off the loan entirely, or use to money in the car fund to make the monthly payments until we get through the crisis.

 

[walkdmc]

In the past, if we got a great financing rate, we'd finance most of it. You have to play the numbers but in this economy, I like having money in the bank. Plus, at MY current auto loan rate, I'll have paid less than $1000 in interest over the life of the loan. It's just not worth giving up 20k or whatever when that money could be in our emergency fund.

 

[timmac]

You were responding to someone explaining why you don't tell the dealership that you're not financing. They weren't saying TO finance, just explaining why.

If you tell them you're paying cash before working out a price, they are going to come up with a higher price than they would if they thought you were financing.

I think you know that, because you said you do just that, but that's why the pp explained it, for those that don't know it.

Just to add on to this a bit... keeping your mouth shut about paying cash is usually a good idea, *except* possibly in a case where the financing offer is very low. If the dealer is advertising 1.9% for instance (or anything lower than about 3%), then you may be better off to tell them you're paying cash. For such low financing rates, the dealer is often subsidizing the interest that the bank isn't making.

More generally, the financing at the bank and what the dealer shows you on paper should be thought of as two different things, because they usually are. The rate the bank is making on a finance is typically not the same as what the dealer gives you as a financing rate. Often enough, it's a few percentage points higher (in which case the dealer actually makes money by reselling the financing, hence why they may bargain a bit more on the price of the car). With special offers on financing rate though, it's the other way around, and the sale price on the vehicle is artificially a bit higher to offset the cost of providing the low interest finance.

 

[Zoesmama03]

A family friend had asked her accountant that exact question regarding her home she had purchased but had CASH to pay for.

He said most definitely take a low interest loan and let it sit in an interest earning account.

 

[Theosus]

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.

Exactly! They know they will make a lot of money in interest, if they finance it. Wheel and deal and get the free floor mats, and threaten to walk out. Get quotes from other dealerships for the same model of car and bring those quotes up. Calculate what you'll save with several different interest rates.

When they send your first payment notification, just write them a check for the whole amount,if of course your state doesn't allow penalties for early payment. My state prohibits banks from penalizing you for that.

 

[Tinknalli]

We puchased a new car in August. We could have paid cash but chose to finance for 3 years with a 1.49 interest rate. With life's uncertainties I would rather have the money in the bank if we ever needed it. We make the monthly payments without dipping into the money in the bank.

 

[malibuconlee]

Sometimes you can get a better "deal" by financing. Be up front with their finance person. Even "financing" for a few months gets the dealership more money and they can reduce your purchase price. I think they asked us to go at least 3 months before paying it off when we recently purchased DH's new truck. Because of some other things that have come up we won't have it paid off in 3 months, but we aren't paying a ton of interest either. Should have it paid off in 6 months. OH, and they wouldn't do the TTL into the price here either. We had to go in and pay the tax separate.

 

[daughtersrus]

DBIL and DSIL always pay cash for their cars even when they're offering 0%. The price of the vehicle doesn't change because since he's a dealer employee, he pays the "D Plan" price no matter where he buys the car from.

They're very frugal with their money so it surprises us that they doesn't hold on to the money earning even a small amount of interest while not paying anything extra.

It's their money to with as they please so it's not for me to say.

 

[chris31997]

We paid cash for 2 cars 2 years ago. We will pay cash in a couple of months for 2 more cars when we move. It is nice not to make a payment to a bank or a dealership. I like to tell people that I don't have a car payment and see the look on thier faces

For those curve balls, we have an emergancy fund that is not dipped into to buy said cars

 

[TnTWalter]

buys a USED [two year old typically] car with CASH.

0% or 1.9% etc. really don't matter...if you are buying a NEW car, you are more often than not, taking a big HIT [depreciation].

 

[Swimalie]

buys a USED [two year old typically] car with CASH.

0% or 1.9% etc. really don't matter...if you are buying a NEW car, you are more often than not, taking a big HIT [depreciation].

I have bought a lot of used cars in the past but as of 10am today I will be paying with a check for my new car. Yes, most cars lose a lot when you drive it off the lot but if you buy a car that holds it's value, then it makes a lot more sense to buy new.

 

[lisaross]

ENJOY That Forester!!!!!! May u have MANY MANY years of repair free!

I have bought a lot of used cars in the past but as of 10am today I will be paying with a check for my new car. Yes, most cars lose a lot when you drive it off the lot but if you buy a car that holds it's value, then it makes a lot more sense to buy new.

 

[disneychic2]

We are saving right now to pay cash for our next car. We will get a one or two year old vehicle. Both our current cars are paid for. We have an emergency fund that will cover 6 months of expenses, so that won't be a factor. As a pp said, if you take advantage of the low interest rates, you'll usually pay more for the car to make up the difference to the dealer. OP, good luck to you! And congrats on saving that kind of money...good job!

 

[MsStinkerBelle]

Let me just say this has been a very informative thread!

I am soon to get an inheritance (waiting for the legal stuff to settle) and after paying off some small outstanding debt and padding my emergency fund, I plan to buy a used car (2yo <) with cash. My current car is 11+ years old and while she's been good to me, it's time to get something in case she falls down and can't get up again.

 

[jodifla]

We crunched through the numbers and decided to finance with the low rate. We prefer our cash in the bank, where it's accessible.