Money

Is it always a good idea to buy car in cash if you can afford it?

Bayer macys
Mar 10

As titled.

comments

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  • Lyft swetool
    No
    Mar 100
  • New CiOI38
    No - it’s a bad idea. They depreciate - instead place the money in interest bearing investments and use those to pay off the car. I did so recently for a new car and will have paid for the vehicle mostly by earned interest leaving my principal in tact
    Mar 103
    • LinkedIn KeFear
      What interest bearing investment did you use ?
      Mar 10
    • Amazon / OtherXIit65
      Thank you for this.
      Mar 10
    • New CiOI38
      @KeFear Private loans where I make 18%, paid quarterly.
      Yesterday
  • Facebook / DesignXXX porno
    If it’s a used car, maybe.....
    Mar 100
  • Goldman Sachs GDTN51
    It’s a good idea to not buy a brand new car buy one a year or two old and avoid the instant depreciation when you drive a new car off the lot. Get a low interest deal if you can (we wait for the 0% deals) and invest the cash.
    Mar 101
    • Oracle / Engjojol
      How can you get 0% interest?
      Mar 10
  • Indeed zegra
    Rates on car loans are the best there is. Leverage them.
    Mar 100
  • LinkedIn KeFear
    Yes, if it won't put a dent in your savings. That way you avoid interest
    Mar 101
    • Google / Engmad👩🏻‍🔬
      This, you can buy a new car, but obviously it's better to pay as little interest as possible. However, if you can make investments that provide more income than the cost of the loan, then don't use it all.
      Mar 10
  • Facebook memememe
    Yes, unless you are good at managing investments. You will need to make about 1.5 times the loan interest rate (before taxes) for the Loan approach to be profitable.
    Mar 100
  • Google
    tsukino

    Google

    BIO
    w
    tsukinomore
    mathematically: iff your (risk-adjusted) expected return on the loan is less than the interest rate
    Mar 100
  • Qualcomm dynasty001
    Just bought a car 2 weeks back for $3300 cash. I saved for it and pulled the trigger.
    Mar 105
    • Qualcomm FindingN
      Well if you have to save $3300... Oh NVM you work for Qualcomm.
      Mar 10
    • Qualcomm dynasty001
      Haha. Where did you move to?
      Mar 10
    • Qualcomm FindingN
      Still with you bro.
      Mar 10
    • Qualcomm dynasty001
      Haha stop by Pac Center in the weekends. I am Leetcoding there. Lets gtfo soon. Unless you really like it here
      Mar 10
    • Qualcomm FindingN
      Ha ha. For sure!
      Mar 10
  • Twitch ~-~
    Think about the liability in case your car gets crashed. Imagine you buy a 25k car. You’re likely going to pay something close to 28/30k (taxes, closing costs, dmv, etc). All of this can go into your loan. Then, 6 months from now you get into an accident, and your car is completely ruined. Your insurance will pay you for the value of the car (maybe closer to 21-22k or much less if later).

    My advice is to take a low interest loan over a long period of time but pay it off faster. I.E. 1.9% over 5 years, and every month you pay an extra 50$ or 100$ towards your principal (not the interest). Then with your insurance, make sure that you have a gap protection (or similar) and let them take the risk in case something happens.
    Mar 102
    • Bayer macys
      OP
      How do you ensure your payments are applied toward principal and not interest?
      Mar 10
    • Twitch ~-~
      Usually, if you pay extra at the time of paying your monthly payments your good. You can always verify by calling and setting up auto payments on the phone.
      Mar 10
  • Microsoft / Eng😈 Mornin⭐
    Look for 0% apr, Nissan has them for sure.
    Mar 100
  • Google / Eng
    J3IFPM

    GoogleEng

    PRE
    Amazon
    J3IFPMmore
    Take in account how it may possibly boost your credit rating. Better rating - cheaper mortgage on house.
    If rating is already good enough - just ignore advice.
    Mar 100
  • Microsoft pu
    depends. Look at the opportunity cost, invested into something else that returns higher than the interest rate of the loan.
    Mar 100
  • Cisco drh787
    Just pay it off in 36 months.
    Mar 100
  • Snapchat asb2
    I see people comparing stock investment returns with auto loan rates. This is apples and oranges. Auto loan is guaranteed 3.5%+ rate, but stock market can go -5% or+15% per year

    I personally pay my cars cash wheneved I can afford and pocket some good discount in the negotiation. the transaction is much faster if you can pay cash and that can be factored in the negotiation
    Mar 104
    • Lyft swetool
      Your fallacies to assume that equities are the only available asset class
      Mar 10
    • Apple jirbfhbdd
      Auto loan at 3.5% erodes at ~2.2% due to inflation. So effective rate is ~1.3%. If the finance company overestimated the agreed value, of if the car maker is heavily discounting as a promotion, it can be cheaper to lease than buy.
      Mar 10
    • Twitch ~-~
      It doesn’t make sense that you’d get a better price by paying cash. They make extra money on financing. Why would they say no to the extra money AND give a discount? Also the federal crackdown on some practices that allowed people to pay less taxes.
      Mar 10
    • Snapchat asb2
      Fair points. The dealership will want you to finance through them and would be willing to give a discount if you do so, but they can and will run your credit through several banks. They will want the commission from the bank at your credit inquiry expense.

      I'm talking about going to your own credit union vs going cash. In that case, the dealer will want you to come with cash for a faster transaction . Also, private party is much easier w cash for the same reason
      Mar 10
  • New / MgmtVSwf01
    Always a great idea, but you must buy used. I've always gone used and made out far ahead than those buying new.
    Mar 103
    • Twitch ~-~
      Is it because you buy from individuals and skip on some taxes?
      Mar 10
    • More that you always get screwed when buying new. The car loses 30% of its value the minute you drive it out the lot
      Mar 10
    • Twitch ~-~
      But that would be true with or without a loan.
      Mar 10
  • Apple jirbfhbdd
    Cars go down in value. Depending on what happens with the price of fuel, the economy, desirability of the model you choose, your purchase value can vary widely. Instead a lease has an agreed amount of depreciation in it. If the car is worth less the finance company eats it. If it’s worth significantly more, buy it at the agreed value and sell it for the profit. Just watch the rates. Have a quote from a credit union at 2-3% in your pocket. Right at the end, after all the negotiations, just before you hand over your credit card, show them and ask them to match or beat it.
    Mar 103
    • Amazon / Mgmthq2yomama
      With a lease, assuming you will need a vehicle, you are committing to paying for it. If you buy, maintain properly, and drive it for a long time, you come out ahead in the long run.
      Mar 10
    • OpenDoor / EngMhBB55
      Leases also include what is effectively a rental fee, which is typically much more expensive than interest.
      Mar 10
    • Apple jirbfhbdd
      They don’t. There’s a ~$350 fee to get out at the end, but everything else is covered in the agreed value and the monthly payment. There’s calculators on leasehackr to determine how long it takes the finance company to break even. It’s pretty simple math that varies based on how much they incentivize the sticker price, and the agreed value and the money factor (APR effective).
      Mar 10
  • Amazon / Mgmthq2yomama
    Yes. Gives you more negotiating leverage than if you are using their credit.
    Mar 102
    • Twitch ~-~
      That’s no longer true. They actually want you to use their financing.
      Mar 10
    • Amazon / Mgmthq2yomama
      Depends on what the terms are. If it's interest free for some time period (or anything lower than their cost of capital), it is costing them money, and they are better off if you pay in cash.
      Mar 11
  • Intel 018’!
    As always, it depends on the interest rate. Why do you think the Fed adjusts monetary policy?
    Mar 100
  • Always take a loan if APR < inflation. That simple
    Mar 100
  • OpenTable Meliodas
    Not always. If you think depreciation will be high (EV’s for example) a lease could be a better deal.
    Mar 100

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