Buying a car in cash is stupid?

Yahoo FireBurn
May 13 63 Comments

I just bought a car in cash. My friend says it is always stupid to buy things in cash. Is that true?

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TOP 63 Comments
  • Facebook FfEV64
    You could have bought the car using a credit card and paid off, within the billing cycle. You would have received points for the transaction.

    Another option was a loan, if <= 2%. You could have negotiated the price of the car, since dealerships get a kickback from the bank. You could have invested the cash in a CD and made money on the Delta % ( rates are around 2.5%).

    You also have stocks etc, which are higher risk. So many options. You left money on the table.
    May 13 3
    • Uber / Eng mH7bSe
      Dealers aren't that stupid that they would let you use CC and they pay the fee.
      May 13
    • Facebook FfEV64
      Done it thrice till date with no change to the purchase price. You may not be able to swing the entire amount, but you can do a partial. Combine with a credit card with a sign up bonus to compound earnings.
      May 13
    • PagerDuty ( 💃 )
      Amex and others have programs with websites dedicated to helping you find dealers that’ll let you out at least some amount of the car purchase on your credit or charge card.
      May 13
  • Facebook public2
    Depends, were you offered a no interest loan or ridiculously low interest rate? If so then maybe, else no. If the loan rate was high you could have still taken it for the rewards and paid it off inmediately for the credit bump.
    May 13 2
    • Microsoft EMoC46
      What rewards?
      May 13
    • Facebook public2
      Cash back, higher end packages, services etc.
      May 13
  • New EKPg16
    Depends. You can get 2.3% yield savings accounts fairly easily - if your APR is below that, then taking the loan is pretty close to free money.
    May 13 1
    • Uber / Eng ohfd
      Epic sarcasm
      May 13
  • Microsoft leetworld
    You're friend is an idiot.
    May 13 0
  • Google bo o
    your friend is stupid.
    May 13 0
  • Microsoft FFSake
    Same as buying a house. Peace of mind that you don’t have to open cash register every month
    May 13 3
    • Uber / Eng mH7bSe
      Completely not same.
      House is for investment and car is for consumption.
      May 13
    • Microsoft FFSake
      The investment part is not that obvious to me though. Along with higher payments you also have to maintain it. For new houses it’s supposedly easy, but oh my how many things are covered in old houses.

      So before saying it’s investment, person has to go through all hassles of such investment.
      May 13
    • Uber / Eng mH7bSe
      Yeah it's not for lazy people like stock is.
      May 13
  • Google GCPCE
    I’m a rewards points hound, so I would’ve paid for it on card, then immediately paid off the card with cash, but the final result isn’t too different than what you did.

    Technically from a pure finance perspective if your best alternative investment returned a risk discounted rate greater than what you could have financed it for you should have done that, but the peace of mind of minimizing debts is typically worth it.
    May 13 0
  • Facebook undrpa1d
    Don't burn yourself over a couple of percentage here and there. You work in the best industry possible. Just find what makes you happy. Is 2% worth the stress of having to cut a check every month? To me it's not. I prefer to buy things in cash just because I can and don't have to deal with a stupid lender or play by their deadlines and rules. Not everything in life is about money unless you're working a minimum wage job.

    Chill out and do whatever
    May 13 0
  • Rally Health FuPayMe$$$
    It’s not stupid. You avoid paying any interest in buying a depreciating asset outright by cash. Make sure you have smartly invested the rest of your money. Avoid debt as much as you can and be invested as much as you can.
    May 13 0
  • Google WarrenBuff
    Yes, it's stupid.

    If you make the right investments, your money can grow 8-11% per year.
    Car loans are cheaper. Many offer 0%. At Max 2-3%.
    So makes sense to take a loan.
    May 13 21
    • Google WarrenBuff
      Nope, you're too lazy to get half. I am saying 8% guaranteed.

      You don't think that's doable. I'll show you it is.

      Lock in period still applies though.
      May 14
    • Microsoft FFSake
      No changes. As far as I see it - it’s a free money and you are confident in your skill set. I will get my 8 percent if you screw up or if you get more (equal) than 16%.
      May 14
    • Google WarrenBuff
      Actually, it should be this way:

      We do a lock-in period of 5 years. In the year it's less than 8%, I pay you complete 8%.
      In the year it's more than 8%, I keep the whole thing.

      Seems fair for the challenge and discussion we're having here.
      You think 8% is not possible, I think it is. All or nothing.
      May 14
    • Microsoft FFSake
      Oh good god. Basic logic . Where on earth did I say one can’t make 8% from investment? I say it’s not guaranteed. I for one made in a year around 40%. That is not indication of future performance though.

      No changes to the deal. I give you free money, you say you can guarantee returns. So I see it as a fair game to give you ability to increase your TC, but you don’t get to keep all of it.

      Even more - you can go take a loan and invest money’s and get all of it (except APR that you have to return, but that is capped - so still a better deal than I can give you).
      May 14
    • Google WarrenBuff
      That's what - I'm saying it is. If I miss my target you get the whole thing, if not I get the whole thing.

      What you want is a free lunch.
      May 14
    • Microsoft FFSake
      Nah, what I want is for you to understand that your ability to take risk has nothing to do with guarantee you are willing to provide
      May 14
    • Microsoft FFSake
      Even more - you get better deal than any financial advisor will get given your level of confidence
      May 14
    • Google WarrenBuff
      You have to be a complete moron to lose money in long term investments.

      Hence "morons" don't trust their capabilities and want guarantees. Those people end up paying cash down.

      Is there a guarantee the house you paid cash down for might not depreciate?

      There is a risk involved in every financial transaction. But 8% returns is doable even if you invest properly in stock market and spread your money. 8% is doable without taking much risk.
      For morons it's not.

      Hence I said - "stupid" people pay cash.
      It's not luck. It's brains.
      May 14
    • Microsoft FFSake
      Ok, I guess we came to no deal.

      If only you could read and comprehend what’s written. Calling people you know nothing about stupid or morons is not something you should be proud of.

      I wish you to grow your gains and never lose, and never have any doubt in ability of your brain to predict future. In fact I am probably speaking g to a billionaire, so I rest my case as defeated in this heated argument. Take care my friend
      May 14
    • Google WarrenBuff
      Bye Microsoft. Go pay in cash.
      May 14
  • eBay eyxitsjtj
    10 years ago I bought a car on loan and immediately paid it off. Made a big fucking mistake. That 30K would’ve grown 230%+ in Index Funds. Always arbitrage on returns vs APR. I could’ve used that money towards downpayment on a house.
    May 13 4
    • Amazon PotatoSale
      You would have paid more if you paying interest for 30k over 10 years.
      May 13
    • eBay eyxitsjtj
      You don’t understand what arbitrage is, do you?

      Also, auto loans are typically only for 5 years.

      I would have paid just $3K in interest over 5 years but I would have made over $40K in Index Funds.
      May 13
    • eBay / IT
      manorama

      eBay IT

      BIO
      Coder
      manoramamore
      Arbitrage in stock market vs bank deposit is not comparable , as you may have downturns that can risk your principal money as well . Hindsight decision may not be true for future opportunities
      May 14
    • eBay eyxitsjtj
      Based on that logic don’t put your money in 401k or Roth or any other investments.
      May 14
  • New arhR58
    Take a loan if you get a very low interest rate. Never buy a new car. You'll save a bundle.
    May 13 0
  • LG lzml
    You can get better deals sometimes but not always. Some times you can get a better price if you take the high APR loan from the dealer. I got a $2500 factory rebate for taking a 4% APR loan I had to keep for a minimum of 3 month. I paid it off after the 3 month waiting period was over. Had also used a large deposit so barely paid any interest plus got an additional $2500 off.
    May 13 0
  • Amazon
    ps.ily

    Amazon

    PRE
    Google
    ps.ilymore
    How much debt does your friend have?
    May 13 0
  • Dave ramsey
    May 13 0
  • New / Eng going2g
    I'm considering buying a used car soon. Am I understanding this correctly: I can pay the entire price of the car with a credit card? I was gonna pay with cash but I'll take the easy cashback.
    May 13 1
    • Google GCPCE
      Most dealerships won’t want to do it on card (because they have to pay a fee for it), but just don’t tell them that you want to pay by card until you get to the final stage. The ~1% swipe fee is still only like $200 on a $20,000 car, so if they balk at you using a card after you’ve otherwise gotten to an agreement just say “well sorry to see that the deal will fall through over $200 in card fees” and get up and start walking away, I’ll bet you 99/100 times they’ll let you go through with it.
      May 13
  • Twitch / Data select *
    Op bought a used car for 2k. No point financing a 2k 2009 used car
    Jun 8 0
  • Autodesk / Other -oQo-
    I guess the question is you pay up or you finance. It is a personal choice. There is nothing stupid or wrong either way. Sometimes you have to do it one way not the other. It would be stupid if you exhaust your cash reserve to pay for a car, however.
    Jun 8 0
  • Fannie Mae / IT mdarkroom
    Have you considered your friend is stupid before posting here?
    May 29 0
  • Samsung
    ultramantaro

    Samsung

    BIO
    Stressed out but surviving
    ultramantaromore
    Your friend doesn’t have a high tc
    May 24 0
  • Twitch / Cust. Srv.
    Im_dumb_af

    Twitch Cust. Srv.

    BIO
    I'm black as the night
    Im_dumb_afmore
    You faking retar. The correct answer is always download Robin hood, then use that money to Yolo with reddit wsb
    May 13 0
  • Microsoft jhvdoncdr
    There’s no one answer. I got a 0% loan for 48 months, and there have been times I’ve regretted it - loan stays and one may need cash for more important things. Or a move may suddenly force you to pay the loan off, without time to prepare. But if all goes well, 0% loan is a very good deal.
    May 13 0
  • Logitech oXrB48
    Yes. If you have cash, use your credit cards to get the points then pay the bill right away. Duh.
    May 13 0
  • OpenTable Meliodas
    Your friend doesn’t have much real world experience. Cash is king for a reason.
    May 13 0
  • Adobe xllu
    You build credit history as you repay. I would have taken a little loan.
    May 13 0
  • Facebook shsgsa
    It is an excellent idea
    May 13 0
  • Ascension Health / Eng
    10xUrTC

    Ascension Health Eng

    PRE
    Facebook
    10xUrTCmore
    If it is a used car, it can save you a reasonable amount of money.
    May 13 0
  • Amazon alshhsk
    I've never bought a car more expensive than $50k, so always paid cash.
    May 13 0