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Old 04-18-2019, 07:21 AM
 
67 posts, read 19,208 times
Reputation: 122

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So a few days ago I started reading a topic in the main Economics forum. It was about why people think the economy is bad. In it, someone mentioned he paid cash for his car and I think just about everyone in the thread told this poster is was not a smart move. I need to go look again but I think literally no one said paying cash was the better financial move and I can't figure out why.

I am looking to buy a car in the next year. I am on the fence with new vs. used. I saved up the cash to buy the new car outright but hope to find a good used one instead to save some money. I just figured I would use cash to buy a car. But that thread got me thinking, is it better to have a car payment? I always come out with “no.” But so many people in that other thread seemed pretty sure (but I don’t think anyone explained why).

I just can't figure out how a payment is better. If you go with a used car, the rates are higher than any interest bearing account. So that makes no sense to me. I had to do more digging with a new car, but it seems that those low rates and 0% rates often come in lieu of cash back or other money saving incentives (to the point where maybe it's a wash). I don't know how true it is, but I read that it can also be harder to haggle down the price of a car when low interest is in the mix. It seems you have better negotiating possibilities (for a lower overall cost) with cash.

In what instance does financing a car make more sense than paying cash?
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Old 04-18-2019, 07:30 AM
 
Location: Fort Payne Alabama
1,208 posts, read 1,582,987 times
Reputation: 2303
When it is zero percent interest!

Last edited by GreggT; 04-18-2019 at 07:30 AM.. Reason: worded wrong
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Old 04-18-2019, 07:33 AM
 
1,588 posts, read 1,973,296 times
Reputation: 2200
If you've got the cash, buying used from a private seller is best. Try to get an original or second owner, three's a crowd, so to speak. ALWAYS pay a qualified mechanic to look the car over before buying.

Youtube has some great vids on what to look for when buying a used car (make sure the seller is the owner, title is clean, car has not been in a wreck, etc.) I particularly like Scotty Kilmer's channel.

If you want to see how dealerships fleece you with financing, Marko Zaitic has a good video on how dealerships use the "foursquare" method in a vid entitled "how dealerships rip you off"
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Old 04-18-2019, 07:49 AM
 
1,639 posts, read 570,534 times
Reputation: 1598
If they offered a 0% loan, I might consider going with payments, however, if I have enough in liquid assets that would cover any unforeseen issues for several years or so, I would definitely pay cash for the vehicle.

I’ve done this several times and although the dealers love for you to finance, you can find the best price when willing to buy it with a bank check. It’s fast and simple and you get a clear title right from the get-go❗️
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Old 04-18-2019, 08:03 AM
 
Location: SE WI
509 posts, read 353,634 times
Reputation: 1335
I would have a serious lack of respect for anyone that would suggest not paying with cash, even if it is 0% interest.
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Old 04-18-2019, 08:03 AM
 
Location: BFE
1,292 posts, read 425,692 times
Reputation: 3968
Do what makes the most sense to you and you feel comfortable with. Me? Only used, always cash. Only payments that make any sense to me was a mortgage, and paid that off damn quick. Debt-free for decades now.
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Old 04-18-2019, 08:06 AM
 
3,006 posts, read 4,229,164 times
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Sometimes the 0% is in lieu of some other benefit such as a cash back bonus. So it's not really free money.
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Old 04-18-2019, 08:13 AM
 
12,705 posts, read 9,961,918 times
Reputation: 9515
Quote:
Originally Posted by WalkingLiberty1919D View Post
So a few days ago I started reading a topic in the main Economics forum. It was about why people think the economy is bad. In it, someone mentioned he paid cash for his car and I think just about everyone in the thread told this poster is was not a smart move. I need to go look again but I think literally no one said paying cash was the better financial move and I can't figure out why.

I am looking to buy a car in the next year. I am on the fence with new vs. used. I saved up the cash to buy the new car outright but hope to find a good used one instead to save some money. I just figured I would use cash to buy a car. But that thread got me thinking, is it better to have a car payment? I always come out with “no.” But so many people in that other thread seemed pretty sure (but I don’t think anyone explained why).

I just can't figure out how a payment is better. If you go with a used car, the rates are higher than any interest bearing account. So that makes no sense to me. I had to do more digging with a new car, but it seems that those low rates and 0% rates often come in lieu of cash back or other money saving incentives (to the point where maybe it's a wash). I don't know how true it is, but I read that it can also be harder to haggle down the price of a car when low interest is in the mix. It seems you have better negotiating possibilities (for a lower overall cost) with cash.

In what instance does financing a car make more sense than paying cash?
Cash is much better for most people who have not made a vehicle selection yet, because people tend to overspend more easily on credit than when buying outright.
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Old 04-18-2019, 08:21 AM
 
Location: WA
5,393 posts, read 21,388,001 times
Reputation: 5884
These are two separate judgments and don't have to be related.

Buying a car is a decision to spend on the value and function of a depreciating asset.

Financing a purchase is a financial decision that may also affect a personal budget.

Unnecessary to mix factors.
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Old 04-18-2019, 08:31 AM
 
Location: Orlando
1,983 posts, read 2,633,656 times
Reputation: 7538
My multimillionaire brother (who at one time sold cars) says, "Never pay interest on a depreciating asset." I always buy (gently) used cars, with cash.
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