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Why pay $1000 when you could pay $0? It depends on what your savings earn and how much liquidity you have.
That $1000 is saved over time several years, not immediately.
If I had $100k cash, and a car cost $30K, I'd still finance. I'd rather have the entire $100k for spur of the moment investment opportunities, maxing out retirement accts, having cash for vacations, surprise insurance claims, etc.
Saving the $18 or so interest per month is not worth the missing out on the opportunities available by having a giant pile of cash.
Wow, so this is awesome. I literally knew NOTHING about what you all posted, so I read everything. Learned a lot. To answer ncole, I just wanted information in general. And to whoever posted about the 2008 Taurus, as I'm not going through and looking for you (not being rude, just lazy tbh), I wasn't saying I am actually looking at getting it. Just an example of what would satisfy me. I'm 19 and childless, don't gotta go too far for work either, so I don't need (or want) no fancy 2016 car. I honestly think that if you're under 21 and without kids, you really don't need the newest truck/car model. It's a waste of money and you're just trying to stunt, plain and simple. But that's my opinion.
Again, though, thanks for the info. Just had a wonderful learning moment here.
If you are offered 0% interest financing, and there is no additional discount or incentive available for a cash sale, then by all means, go with the interest-free financing. But understand, there is no such thing as an "interest-free" loan. IOW, the financing cost is factored into the price you are paying, somehow. Most of the new-car 0% financing deals are going to be in lieu of a cash rebate/additional discount applied to the vehicle sale price. I haven't run across any 0% deals for used cars.
Another element you need to factor in (which most sample formulas do not), is the money you would not be allocating to monthly payments, if you pay cash instead. If you invest that amount every month, instead of spending it on something else, does the financing deal still look better over the course of the loan?
I've actually gotten 0% car loans and an additional rebate because I used manufacturer financing. Trust me, I've purchased quite a few new cars and I do all of the math (including the point you raised in your second paragraph) and I almost always come out ahead by financing.
Finally, investing the money in monthly installments can't possibly come out ahead of having the entire amount remain in the investment from day one (unless the investment is producing negative returns, which is a different discussion).
Wow, so this is awesome. I literally knew NOTHING about what you all posted, so I read everything. Learned a lot. To answer ncole, I just wanted information in general. And to whoever posted about the 2008 Taurus, as I'm not going through and looking for you (not being rude, just lazy tbh), I wasn't saying I am actually looking at getting it. Just an example of what would satisfy me. I'm 19 and childless, don't gotta go too far for work either, so I don't need (or want) no fancy 2016 car. I honestly think that if you're under 21 and without kids, you really don't need the newest truck/car model. It's a waste of money and you're just trying to stunt, plain and simple. But that's my opinion.
Again, though, thanks for the info. Just had a wonderful learning moment here.
Funny but I see it backwards. If you're young and childless, that's when you should buy your dream car. By the time you're married with kids, your car choices will get much more limited. You'll be relegated to 3 Row SUVs and minivans. Don't waste your early 20s on an old Taurus.
Funny but I see it backwards. If you're young and childless, that's when you should buy your dream car. By the time you're married with kids, your car choices will get much more limited. You'll be relegated to 3 Row SUVs and minivans. Don't waste your early 20s on an old Taurus.
With the costs of vehicles now.. that old Taurus is about all that someone in their early 20's can afford.
That $1000 is saved over time several years, not immediately.
If I had $100k cash, and a car cost $30K, I'd still finance. I'd rather have the entire $100k for spur of the moment investment opportunities, maxing out retirement accts, having cash for vacations, surprise insurance claims, etc.
Saving the $18 or so interest per month is not worth the missing out on the opportunities available by having a giant pile of cash.
Then why don't you max out all the heloc's you can get, 0% credit cards, borrow against everything you can, and margin your investments to the hilt?
So would the pro basically be to get a car you can't pay cash with?....
I'm a little lost for real.
Yes. I finance cars because my PERSONAL decision is that I'd rather have small payments, then take money out of savings or investments to pay cash. Yes, I know that I'm paying more for the car in the end because of interest, but often, I'm able to get a 0% interest loan, so that's not really a huge factor (still comes with fees though). If the interest rate is 16%, it's a pretty dumb financial decision, but if it's 1.7%, it's not so bad!
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