Is it best financially to buy new car in cash?
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Anonymous
| If you can afford it, do you think it’s best to buy a new car in cash? Or is there a benefit to getting financing in these high inflation times? |
Anonymous
| I did. The interest after tax was more than I can earn on cash and I don't want to deal with a payment. |
Anonymous
|
Of course! Only time it makes sense NOT to buy with cash is if the interest rate is very low (0% or 0.9%).
Right now, pay cash, don't take a loan for 5-6%. |
Anonymous
| I’ve financed car purchases before. But the total interest on the loan came out to be around 1000-1500. I thought that was a reasonable premium to have more cash on hand. |
Anonymous
| Sometimes they reduce the price if you use their financing. It could be worth it to take out financing then pay off the loan in a month or two. |
Anonymous
+1 Did that 10 years ago just to save $2000. Took a loan for about 1/3 of the vehicle at 0.9% and paid it off the first month. Then had to wait to get the title documents back in my name not the banks. But it was worth the $15 interest to save $2K. Had it only been $500 savings, I would have skipped the loan process, as I had to unlock my credit to apply, since we typically don't use new credit and pay cash for most things or put on a CC and pay it off. Figured 1 hour of my time was worth $2000 in savings. |
Anonymous
| Yes of course. If there is a rebate or something, we’ve financed and then paid it off two weeks later. Make sure there is no prepayment penalty. Always first charge the maximum to your points credit card (varies by dealership, usually $5k or so. |
Anonymous
I know a guy who does this. Signs up for a really bad 72 or 84 month loan with a high APR. The dealer will discount the price in the car because they think they will make a ton on the financing. I’m sure he’s not the only one that does this. |
Anonymous
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"Make sure there is no prepayment penalty."
Do these still exist? |
Anonymous
Yes. In the US, just about all consumer loans do not have prepayment penalties. It will be listed clearly if it's not -- it's required by law to be listed clearly. |
Anonymous
| Depends. Right now it is. In 2020 it wasn’t, they practically paid you to get 2020 cars off the lot at 0% interest for 72 months. |
Anonymous
+1, last car we did a 0% loan which was a no-brainer because it's just free money. This time we paid cash. Even better, we put as much of it as we could on a rewards card. |
Anonymous
|
If you pay cash can you use a personal check and drive off with the car?
Or does it need to be a cashier's check? |
Anonymous
| People who have done this, do you negotiate a cash price and then ask for a discount for financing? |
Anonymous
We bought a car a few weeks ago with a personal check. |