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Credit union, great rate, financed 100% of my car, let the cash sit collecting far more interest than I am paying on the loan.
Thats basically what I did with my current car too, its definitely the way to go! My credit union also dropped the interest rate once they ran my credit and found i qualified for a better rate.
For the money I make from work, (in return), makes taking the car loan well worth it, plus with each month I make my payment on time, my credit score goes up, I dont care what anyone says, its a good feeling knowing you can go borrow money if you ever needed to, to get a high enough credit score, you have to take loans out and pay them on time.
As you can see, there are a lot of opinions. Some of them may not apply to you, so shrug them off if they don't.
I'm a lot older - and hence richer - than you. But I remember a time when paying cash for a car was impossible. 10,000 may as well have been 10 million, for all the money I had.
If you are starting out, start cheaply, with a car reputed to have a long life. Buy a 2 year old car if you can. Honda; Toyota. Buy something you like, though, because smart people keep their cars a long time.
Try to arrange financing through your own bank. Talk to them first to see what kind of loan you can expect. The reason you do this is because the bank will give you a slightly better rate than the dealer.
Best advice.
Wisdom comes from age and experience.
Quote:
Originally Posted by k350
Credit union, great rate, financed 100% of my car, let the cash sit collecting far more interest than I am paying on the loan.
Join a credit union. Find one.
All of my current vehicle purchased have been used older vehicles with low miles - private party. No payments. Cash.
In the past. Have waisted 10's of thousands of dollars in youth buying new cars. In depreciation. And for what? To show off to friends and coworkers - have a new car?
Curious to hear about your experiences financing – did you take a car loan? How was that process?
But to answer specific question.
As stated above, join a credit union. But at least speak with your local bank. Find out what you can afford.
Note that most new car dealers make much money on financing. Profit for the dealership.
Just because you have the ability to pay cash doesn't make it the best move. I finance as long as the interest rate is low enough. I don't put money down.
The financing came from myself. I paid it out of my account with money I saved. Don't buy it if you can't afford it. You can't afford it if you don't have the money on-hand.... Weird concept right!?!
We've done it both ways and the 100% down method with cash is SO much better. Why finance something that starts depreciating before you even drive it off the lot? In 2006 we decided to stop the madness of credit cards and car payments. The only thing we owe on is our house and we put down a big pile of cash on that.
If only we had made this decision in our 20's instead of our 40's. Oh well, can't go back but as long as you're above ground you can change!
If the interest rate is low, I take the financing even if I can pay cash for the entire vehicle.
Last time I bought a car (1 year old used Ford) I got 1.9% financing for 66 months. I actually do actively put my money into the market, so why should I rush to pay off a 1.9% loan when I've returned much greater than that in the market so far this year.
I keep my cars for years (usually at least 10 years) after they've been paid off regardless, so if I pay if off in 6 months, or 6 years, it doesn't matter if the interest rate is low enough.
We've done it both ways and the 100% down method with cash is SO much better. Why finance something that starts depreciating before you even drive it off the lot? In 2006 we decided to stop the madness of credit cards and car payments. The only thing we owe on is our house and we put down a big pile of cash on that.
If only we had made this decision in our 20's instead of our 40's. Oh well, can't go back but as long as you're above ground you can change!
when someone says something like the above bolded post, you immediately know that they have no idea what they are talking about. paying cash or financing is in no way linked to the cars depreciation, it will depreciate the same either way. its a financial decision that has to do with your money, not the product you are buying.
1. Don't lease. Yes, it is a financing mechanism, but it is generally the worst way to do it. Sure, the monthly payment may be low but it guarantees you'll always have a payment.
2. Compare the total cost of bank financing, dealer financing, and even zero percent financing. Zero percent might not be the best deal because the dealer might not be as flexible on other parts of the deal. The dealer might offer to meet your bank's rate but the dealer might have flexibility to go below the first rate they offered you, so push them to get a lower rate.
3. The zero percent, zero payment option. This is the best part of the deal. Say you have a car loan for five years and you drive 20,000 miles a year, which means you have 100,000 miles on the car when the loan is paid off. Keep driving that same car! Once it's paid off you don't have a payment, and that's where you want to be. The shiny car on the lot that is going to start costing you $400 a month immediately is way more expensive than the slightly less shiny car in your garage that will get you where you want to go for the next five years.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by evening sun
If you need a loan, see if you can get a zero interest loan, some dealers offer them, but only to good credit.
We just did that on a new Outback, 0% interest for 63 months. The cost is the same as paying cash, but you can leave the money in the credit union making interest instead of paying interest.
Where are you people putting your money on deposit that makes useful interest? I'm finding CDs running from 0.4% (6 mo.) to 1.0% (5 yr) and passbook savings at 0.5%.
Yes, you can make more money in the market; of course you can lose it too. US Treasury obligations are running well below 1% for reasonable terms.
If you take a loan with interest, you WILL pay that interest - unlike investing in the stock market where there are no guarantees.
This whole discussion, of course, only applies to people who have enough cash on hand to buy a car outright; then it's a decision. If not, then it's not a decision. There are people with $500 on hand who need to buy a car. For them, a loan is the only option.
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