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The only time I've ever put any money down on a car loan was the first time. By the time that one was paid off I had developed a knack for finding underpriced cars; equity is equity, so when you ask to borrow $7000 for a vehicle that books for $12,000, the banker isn't really all that concerned with where that $5000 difference comes from.
I've continued to hone my bargain-seeking skills to the point where I can usually pick up perfectly serviceable cars for a few hundred bucks so I don't have to worry about the banks at all anymore.
100% cash. Cars depreciate the minute you drive them off the lot. They're a consumer item. I've never had a card loan, and never will. Never bought a new car, either; although that might change in a decade or so when I replace the one I have, but it will be for something modest and fuel efficient.
Raise the bar for yourself. Challenge yourself to live like no one else does now, so you'll be able to live like no one else in the future. I know that sounds hokey, but it's true.
this.
don't buy what you cannot afford to pay in cash. A car purchase is usually no surprise, you have time to save up for it. And you'll appreciate it much more if you actively got out of your way to save up and pay for it in cash.
0%... you don't build equity in car so there is no reason to pay it off early, nothing to recoup
If you want to spend $10,20,30,100k on a car, you spend it. But if you want to put 20% for a lower payment, then buy a car that is 80% cheaper instead
No, you've got it backward. You want to minimize borrowing money for a depreciating asset, because there's no way you can sell it for more than you paid for it and overcome the cost of money. If you borrow money for an appreciating asset, the appreciation can offset the cost of borrowing.
100% cash. Cars depreciate the minute you drive them off the lot. They're a consumer item. I've never had a card loan, and never will. Never bought a new car, either; although that might change in a decade or so when I replace the one I have, but it will be for something modest and fuel efficient.
Raise the bar for yourself. Challenge yourself to live like no one else does now, so you'll be able to live like no one else in the future. I know that sounds hokey, but it's true.
They do depreciate the moment you drive them off the lot, so why pay 100% cash for something that is going to lose money right away?!?!
I'll take a modest 10-15% down and the 2.34% interest rate we got on our car loan. I'll keep that extra cash we didn't use to buy the car in investments and come out ahead over the years we own the car.
Still have to have enough brains to get a car that doesn't cripple your monthly net income though. That's where people make the mistake. Getting a car they simply can't afford.
I put $500 down on both cars I bought (2007, 2011) and both times the dealers never scoffed. Interest rates were 0% and 1.9% and financed through dealership so as long as they could qualify you they didn't seem to care about your down payment size.
I think there's additional risk if you finance a vehicle that you couldn't afford otherwise. It's like purchasing a stock on margin and not having the funds if there's a margin call.
Could be but that doesn't change what I am saying. The car will depreciate the same the minute you drive it off the lot whether you finance or pay full cash. There are plenty of arguments you can make for or against either cash or financing. Depreciation is not one of them as paying full cash will not change the amount of deprecation and neither will financing. In my experience some Ramseyites tend to get stuck in the Baby Steps.
Could be but that doesn't change what I am saying. The car will depreciate the same the minute you drive it off the lot whether you finance or pay full cash. There are plenty of arguments you can make for or against either cash or financing. Depreciation is not one of them as paying full cash will not change the amount of deprecation and neither will financing. In my experience some Ramseyites tend to get stuck in the Baby Steps.
Paying interest on a car continually going down in value is not something I want to do. Of course there is the whole interest rate arbitrage game you can play.
It seems if you plan on paying cash you should consider financing if there are incentives or rebates to finance. Just pay it off after the first month assuming no payoff penalty.
I find excellent deals on 1-2yr old cars with some miles left of bumper to bumper and atleast 3-4 yrs left on the powertrain warranty, so I put down $0.
What is the point in paying 100% cash for a nearly brand new car, just to say you have no payments, when a car can be totaled any given day out of the year and looses value and probably 30% of the value if it is wrecked and repaired. Its better to have $10-30K in your bank account than a car, so if an emergency happens or you lose a job, you have access to cash vs having a paid off near new car that you cant live out of.
Now if you have 1yrs worth of savings in the bank, and have $20-30k cash, I can see just buying a car outright, but it still can be damaged in a wreck and not even worth what you paid, the day you drive it off the lot. Id personally rather just pay $500-1000 a month on payments for a few years if I had $30K cash , just incase of emergency, since to me cash in the bank trumps a temporary debt, as long as the APR is under 2%
Cars provide transportation, which is an ESSENTIAL service. Another essential is cash flow. Try not to let the first clobber the second. Debt is meanwhile a perfectly legitimate tool to help out in that regard. Try to get the interest rate as low as you can, such as by putting the balance on a home equity line of credit if you have one. If you don't have one, you maybe should.
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