Is it ever a good idea to pay full price for a car up front?

[Anonymous]

Anonymous wrote:Why or why not?

Is it ever a good idea to get a loan for a fast depreciating object?

[Anonymous]

Anonymous wrote:The car is cheaper, generally, if you finance it. Pay off the loan with cash the next month.

This. The last two cars I purchased each had a several thousand dollar discount for financing the purchase. I financed and then paid it off (although the last one, I just paid out more than the minimum payment over time because the interest rate was so low).

[Anonymous]

Anonymous wrote:Why or why not?

Absolutely and to use it for 10 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The car is cheaper, generally, if you finance it. Pay off the loan with cash the next month.

Nah, I negotiate the price upfront. Then, when they get to the subject of financing I say “cash”. I normally buy certified per-owned, low miles, one year old. The last car I bought was actually new only because I couldn’t get the trim I wanted CPO. So for that one I bought at the end of the year in the sale.

Most dealers of high end new cars (where they get a lot of cash buyers) will make the cash vs. finance price distinction clear up front.

[Anonymous]

Anonymous wrote:I hate buying cars and paid cash for every one I bought. I was raised really poor and learned early that debt keeps poor people poor.

THIS^

[Anonymous]

Wealthy can do whatever they want but for smart UMC, you buy what you can afford.

[Anonymous]

Anonymous wrote:Sure you avoid interest. And don’t drag down your credit rating with debt.

I have a 800+ credit rating with no debt other than a mortgage, and when I took out a car loan (because the dealer offered a discount on the price for financing), my credit rating went up.

[Anonymous]

Yes, of course. Loans are currently 6-7%! We paid cash in February and never really considered financing it. But when we've been able to get a 0-2% loan, financing makes more sense.

I personally don't like having monthly payments if I can avoid them, even if I can easily afford them, because when you load up your budget with lots of monthly payments, it can make it harder to take advantage of financial opportunities as they present themselves. We are looking to go mortgage-free in the next 5 years for this reason, even though our mortgage is locked in at a low rate. If we have no mortgage, our income offers us a million opportunities. If you have a stable job, and especially if you are dual income, liberating your income from debt payments offers you a lot of potential reward.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why or why not?

Is it ever a good idea to get a loan for a fast depreciating object?

It's a good idea in low interest rate environments.

[Anonymous]

Anonymous wrote:Sure you avoid interest. And don’t drag down your credit rating with debt.

That's not how credit ratings work.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Of course. The rich don’t get car loans.

The rich i know lease cars!

Maybe new money does that. Old money keeps their cars for 7 to 10 years.

OMG the stereotypes. Did you read that in a finance magazine.

We have leased and paid with cash. Cash was best for us but everyone is different.

[Anonymous]

I have only ever paid cash. I don’t know that it is optimal, but works for me. I value simplicity in my financial transactions.

[Anonymous]

We always buy a car with cash and then drive it into the ground. Why pay interest on something that loses its value so quickly?

[Anonymous]

If you are rich it doesn’t make sense to get a car loans. Loan in depreciating assets are pointless unless you cannot afford to pay cash. The interest rate arbitrage is insignificant on a loan of car amount size for the duration it would be outstanding (or at least not significant enough to be worth the effort).

Part of becoming truly rich is realizing that time is your greatest asset.

I grew up well off and when I was younger we were very comfortable (compared to our keys we were becoming rich). But by mid to let 30a we were objectively rich.

We by good but not very nice cars, just because that isn’t our thing. Last time we bought one, we were getting ripped off by about $3k at the very end. We objected and the salesman did this whole thing about taking it to his manager etc. the manager came back with a $500 discount. It was complete crap. T was clear that this would go in for the next 3-4 hours and they would come down another $1000. If we walked and returned at the end of the month, they would likely have given in on the whole $2500 remaining disparity. I turned to my husband and asked if our time was worth $2500. He agreed and we just overpaid. That is was true wealth buys you. The ability to buy back your time and make annoying things like the car buying process go away.

[Anonymous]

People want fancier car than they can afford, hence the need for lease or loan.