Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
New cars are a horrible investment even without the inflated prices. If you can keep your ego in check and buy a vehicle a little older. You can keep it for a couple years and get pretty much what you paid for it like I always do. And pay cash private party. Stay away from the dealers. Trick is not overpaying in the first place. I financed my first 3 cars new. And did the math on how much money I wasted. Never again.
Depends on the make and model. The difference between a 2 year old CPO Forester with a ton of miles on it and the brand new Forester that I bought was about $1,000. And the new car offered 0% financing, the CPO didn't. The OTD price I paid was in line with what everyone else paid nationwide.
If you're buying a German car that depreciates like a rock, I'd agree.
That doesn't actually help. Last time I bought a vehicle, we agreed on a price. When I then told the salesman I planned to pay cash, the price of the vehicle went up. And if I agreed to take a loan just to get the lower price, there was an early payoff penalty. Yeah, they were going to get their interest money one way or another. And this was all before the current car shortage.
Yikes! Well, so much for that old sage advice.
Quote:
Originally Posted by hooligan
Exactly right. I can get a new car loan through USAA for 2.24% if I sign up for automatic payments.
At that rate, why on Earth would I pay cash?
I look at it this way, by borrowing, I am paying a little more than I need to. If I have more than enough assets to take care of my needs (emergency or otherwise) and the interest I earn on those assets is less than the interest I would pay on a loan, why not pay cash? In other words, why keep the money and earn 0.5% while paying 2.24%? To clarify, I have investment accounts and my cash savings account. Money for the car came out of cash savings.
But I also had another reason that probably isn't so common, I wanted to shave down my assets as much as I could for FAFSA. Really, the cost of a new car and what I have to pay with FAFSA is peanuts, but I take the philosophy that every penny counts (as you can probably tell from my first paragraph). I also put as much down on my car as I could on my credit card with cash back rewards and then paid off the credit card the next day.
That's just why paying cash is right for me. Maybe I am wrong or something, but I sleep better at night and I have one less bill to worry about. If borrowing is better for you, so be it (just trying to point out another side of the coin).
PS to add, it's also going to make things a lot easier for me when I transfer the title to another state when I move. Where I live, you don't get your title/proof of ownership until you pay off your car. So you have to do something where the state contacts the other state or whatever. Sounds like a bureaucratic nightmare. By having the title, I just go to the DMV and transfer. Not a main reason to pay cash by far, but a nice perk.
I will say this, when my husband passed, we had 0 debt. When I found out how much he has stashed away in savings, I about fell out in the floor. With the way used car prices are right now, I can get back what we paid for…with both vehicle.
There can be personal circumstances where it might make more sense to pay cash (assuming one has the available cash + safety margin), rather than finance.
Insufficient capacity to take on more monthly payments would be one of them. This can be especially true of retired senior citizens, who have substantial accumulated liquid assets, but not a lot of monthly income from Social Security and retirement accounts.
It's basically obvious to anyone who has shopped a car over the years but car dealers are pressuring customers to use loans and not cash more than ever. They're more open about it now.
Keep in mind third party money helps fester price inflation and in a time when the driving public is being coerced into buying an electric car at double the price this can become an even bigger issue.
Also note auto loan debt is reaching all time highs and many find themselves underwater on their car purchase.
Nope no logic at all. Maybe someone actually wants to own their car and not be a debt slave. I do not give a rats a** about the rate. Paying cash is always a piece of mind.
Things cost money, You buy them. Its not risking your capital anymore than buying a $2000 GeForce RTX 3090 video card is. Well some things costs a lot more than others with cars being generally 2nd biggest expense after a house, but money is money.
That's why you pay cash for your vehicle always and keep it at least 8+ years or 100,000+ miles before buying another. And I say at least if not more.
This is true.
I’ve had my car for 7 years in November and the truck for 5 years this month. Both have less than 50k on them. This ia the first time I’ve ever had a vehicle this old with this type of mileage on it…I kind of like it especially since they were payed in full the day we drove them off the lot.
Car prices are getting way out of hand. I purchased a brand new vehicle in 2020, decided I didn’t really need it and I sold it last week for more than what I paid for it.
A 2 year old car, worth more now than what it was worth brand new in 2020.
That’s how ridiculous Biden’s America has become.
I think Biden is a moron but the partisanship is what's tearing the country apart. The US has been declining since the 80s, maybe the 70s and to pin it on Biden just shows your partisanship or ignorance.
Yeah nothing new there. I have worked that into a negotiation before for a better price and then just paid it off right away. But that was a long time ago before rates under 3%. In such a low rate environment it’s better to take the loan and invest the money.
Heh. I showed up ready to write a check, then the dealer offered me 0.9%. I did put on a show of not wanting to go into debt - there is such a thing as going down fighting - but that was a no-brainer.
There can be personal circumstances where it might make more sense to pay cash (assuming one has the available cash + safety margin), rather than finance.
Insufficient capacity to take on more monthly payments would be one of them. This can be especially true of retired senior citizens, who have substantial accumulated liquid assets, but not a lot of monthly income from Social Security and retirement accounts.
He was in the military and wanted the best possible situation for the kids and I if anything happened. Even now, I have money stashed away in different places to help support us.
I kind of dread the day when I have to buy another vehicle. Especially with them at the prices they are currently. Yes I could still pay cash but I’m still dreading it. I enjoy driving both of the vehicles we have.
...I look at it this way, by borrowing, I am paying a little more than I need to. If I have more than enough assets to take care of my needs (emergency or otherwise) and the interest I earn on those assets is less than the interest I would pay on a loan, why not pay cash? In other words, why keep the money and earn 0.5% while paying 2.24%? To clarify, I have investment accounts and my cash savings account. Money for the car came out of cash savings.
But I also had another reason that probably isn't so common, I wanted to shave down my assets as much as I could for FAFSA. Really, the cost of a new car and what I have to pay with FAFSA is peanuts, but I take the philosophy that every penny counts (as you can probably tell from my first paragraph). I also put as much down on my car as I could on my credit card with cash back rewards and then paid off the credit card the next day.
That's just why paying cash is right for me. Maybe I am wrong or something, but I sleep better at night and I have one less bill to worry about. If borrowing is better for you, so be it (just trying to point out another side of the coin).
PS to add, it's also going to make things a lot easier for me when I transfer the title to another state when I move. Where I live, you don't get your title/proof of ownership until you pay off your car. So you have to do something where the state contacts the other state or whatever. Sounds like a bureaucratic nightmare. By having the title, I just go to the DMV and transfer. Not a main reason to pay cash by far, but a nice perk.
Like I said - emotion/psychology almost always pays a part.
For me, I'm pretty comfortable I can take that $40-80K and make more than 2.25% over the next 5 years, so paying cash for a vehicle is actually losing money.
Simple solution: don’t buy from car dealers. Let someone else take the depreciation hit, buy used, pay cash. It’s been a winning strategy for me for 30+ years. On the rare occasion I’ve bought a new car from a dealer, I’ve regretted it every single time.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
