Would it be dumb to refinance to buy a new car or is car loan better?

[chet everett]

I have to comment on the "when you are willing to pay cash, the dealers will give a really good deal." line.

A former neighbor owned a car dealership. He was a great guy and I used to talk with him a lot. We would literally cut our lawns together. Now Gabor was worth probably 10x or more what I was, but I figured anybody with that much dough who cuts his own lawn can't be all bad. So I used to buy my cars from him. And one day I asked him, in sort of a neighbor / friend way, what sorts of deals made him the most money as a car dealer. He said, with out question, the folks that would finance the LARGEST possible amount for the LONGEST possible time. If they could get nothing but people so foolish to do so that would be ridiculously profitable, and those folks would likely do that over and over.

So I asked him what about people like ME, who paid cash. He admitted that I did help him get to the sales numbers that he needed to maintain a healthy rating with GM on their "floor plan" which was their method of providing short term financing of the inventory he kept in the store.

It is not so much that he would give me "good price" BECUASE I was paying cash, but that he knew I knew what his "dealer cost" was as far as invoice from GM, and by ensuring that I would pay cash I helped him not to "make more money" but to have the cash flow that the floor plan demanded. He did not really need me to pay cash, as he could get that cash from down payments alone, but as he knew that I would not finance and make the deal more profitable to him he did not let me waste the time of his true salesmen nor would he waste my time making up some untrue price. Anyhow Gabor died a few years back, after his first marriage did not work out so good, and his wealth got split between a second wife and his kids that did not have the desire to work retail hours and devote the time he did to getting people into cars... Great guy.

[debtmonger]

Not only would I advise against a refi on a home to buy a car, I would advise against borrowing to buy any car at any interest rate. Pay cash for what you can afford. Any car at any age can have a problem. I purchased my last new car about 15 years ago. I had to replace the transmission 4 times. It was under warranty, but it was still a huge hassle. Cars go down in value so fast, you can pick up a pretty dependable 4-5 year old car for a third or fourth of what a new car costs. Now what's the chance that your repairs over the next 5 years are going to total $20,000? Most of the time people just get car fever and use the dependability factor as an excuse. Save your money.

[texdav]

I would say that with so many giving zero to very laow interest loans its going to be hard to beat those car loan if you have good credit.Ther also is a reason that people don't want to buy a used car when they can aford a new one. What epople condier a value varies also. Some thinkl taht trailers are the way to go in homes too.Also check the refiancing charges before you decideand into equity loans if that is your decision.

[debtmonger]

Originally Posted by texdav

I would say that with so many giving zero to very laow interest loans its going to be hard to beat those car loan if you have good credit.Ther also is a reason that people don't want to buy a used car when they can aford a new one. What epople condier a value varies also. Some thinkl taht trailers are the way to go in homes too.Also check the refiancing charges before you decideand into equity loans if that is your decision.

You are comparing purchasing a used car instead of a new car to buying a trailer instead of a house. Trailers like cars go down in value. By purchasing a used car, you have let some other poor soul take the butt kicking on the depreciation. I don't care if it is low or 0 interest, I will pay cash for what I can afford and it will always be a good used or experienced car and I'll drive it into the ground. It's not that I can't afford to go out a buy a new car, I just choose to use my money for other things that make more sense to me. Even if I had many millions, I would still buy used vehicles.

[glenn_1000]

"Even if I had many millions, I would still buy used vehicles." So would I: '65 Corvette, '69 Camaro, '71 Hemi Cuda.... the list goes on. You can buy fully restored classics in brand new condition for less than what a new car costs, and they last forever unlike the plastic and electronics on new cars. But the particular models I listed will cost you a chunk of change

[vpcats]

I'll give you all the update. I am not going to refinance but I did buy a new car.