I've only ever paid cash for cars. I made a mistake of buying a new car only once, and did that simply because that's what everyone else in my family always does.

After that first time I've always bought certified, pre-owned cars (so yes, used). So much less money, and they run great and last a sufficiently long time for me to feel it's money well-spent.

(I also only ever buy refurbished laptops.)

"Nothing hurts car negotiations more than showing up in a cab."

LMAO!

If you don't buy in the two years since you sold your condo, you may be liable for capital gains tax, depending on how much money you made from the sale. This is probably not the case for you as you are considering buying a car with the proceeds, not a house.

http://www.irs.gov/uac/Publication-523,-Selling-Your-Home-1

If you can't afford a monthly payment, can you really afford a new car? Invest some money and do what a PP recommended. Buy a two year old car with a warranty, so you don't take the hit on depreciation when you buy a new car.

Anonymous wrote:

I grew up in a family of mechanics. Trust me, it's all downhill with your current car. You should have had A LOT of maintenance completed at 150k miles. On top of that, have you had your suspension replaced? Is your rear valve cover losing oil yet? Stab links still strong? CV boots not torn? Transmission flushed?

Oh, trust me, I've put thousands in this car. I try not to think about it. All of the things you're talking about sound quite familiar. But it's diesel stick and at this point, I think everything else will fall apart before the engine goes.

Credit Unions are offering 1-3% on car loans. Why would you pay for a car in cash under these circumstances?

As I mentioned, it's because I don't have enough slack in my budget to make a payment. 0 percent interest isn't really relevant if you don't have the extra $200 or $300 or whatever to pay each month.

(I'm not trying to argue, just answering your question)

You make the monthly payment out of savings. A few of us have said that. Perhaps you didn't read that earlier.

With cash flow that tight, if you do buy something you're best off IMO with a ~2 yr. old used car with a CPO warranty from a dealer. Let someone else take the first depreciation hit and you'll get something still under a factory warranty (which often are extended beyond factory length, or can be, for a CPO (Certified Pre-Owned) car).

I grew up in a family of mechanics. Trust me, it's all downhill with your current car. You should have had A LOT of maintenance completed at 150k miles. On top of that, have you had your suspension replaced? Is your rear valve cover losing oil yet? Stab links still strong? CV boots not torn? Transmission flushed?

Oh, trust me, I've put thousands in this car. I try not to think about it. All of the things you're talking about sound quite familiar. But it's diesel stick and at this point, I think everything else will fall apart before the engine goes.

Credit Unions are offering 1-3% on car loans. Why would you pay for a car in cash under these circumstances?

As I mentioned, it's because I don't have enough slack in my budget to make a payment. 0 percent interest isn't really relevant if you don't have the extra $200 or $300 or whatever to pay each month.

(I'm not trying to argue, just answering your question)

Depending on the time of year, dealerships are offering 0% financing. Credit Unions are offering 1-3% on car loans. Why would you pay for a car in cash under these circumstances? You could invest that lump sum instead and make a profit.

If you aren't going to buy soon, I'd look into investment options, not shopping options.

I grew up in a family of mechanics. Trust me, it's all downhill with your current car. You should have had A LOT of maintenance completed at 150k miles. On top of that, have you had your suspension replaced? Is your rear valve cover losing oil yet? Stab links still strong? CV boots not torn? Transmission flushed?

If I were you, I would look selling your car privately. 16 years and over 150k miles means most dealerships won't give you more than $3k because they can't sell it. Banks don't like giving loans for that combination so the dealership is going to wholesale it at auction. So, sell it yourself. Take that money and maybe another $8-$10k so you'll have probably $13k-15k to buy a car with. It won't be new, but it will be significantly newer. When I buy at a dealership I tell them what price it needs to be including taxes and tagging. You can work down the original price and once you throw that in, it goes down another $1k or so at the price, depending on tax rate.

Yes. Get new car with killer .9 financing and make payments out of savings. Easy peasy and gives u loads of flexibility and u not in desperate need of car. Nothing hurts car negotiations more than showing up in a cab

Thanks PP 7:37. I think one thing I'm wrestling with is that I don't really have any slack in my budget for car payments, now that I'm paying for day care. I just started using YNAB so I should have a better view of my finances in another month or two, once I get used to its system. But right now, things really are tight.

I have been continuing my contributions to a Roth IRA and I put some money in a 401K (far less than the fully funding it, though)…I could stop making those contributions for a few years, but that strikes me as more financially unwise than using my "down payment money." But maybe I'm wrong about that?

Another thought: maybe I get a car loan, and just use part of my savings to pay it off over time. Maybe there'll be some month here or there over the course of the car loan where I would have enough money to cover the payment without tapping savings.

I think your car is pretty old and you have a decent amount of miles on it so perhaps you need a new car more than you say. (I have a 16 year old car but it only have 120K miles.)

We bought a new car last year and got .9% interest. We also got a price significantly less than invoice price so shop around. We would have paid cash but the .9% interest for 5 years - no cost loan, can pay off early - was hard to turn down.

OP here: One variable I didn't mention, though I don't know if it would make a difference to anyone, is that I don't see myself getting back in the housing market any time in the next few years.

No. House is more important than car. I always believe in paying cash for cars though.

It would be really dumb to take part of your down payment fund to buy a car you don't need

Don't buy a new car

This is not as exciting as the "I make a billion dollars a year and I'm broke" threads, sorry.

Last year I sold a condo, with plans to roll the proceeds directly into buying a new house. For various reasons, I decided not to buy right away and am now renting.

I'd like a new (or new-to-me) car -- I'm not going to pretend I *need* a car; my 13-year-old hoopty with 163,000+ miles on it is running all right. It needs repairing now and then, and some of those repairs have been pretty expensive. But it's always less expensive than buying a new car. So, this is not a necessity, just a desire.

I really don't have a lot of spare cash to handle a car payment, but I look at that money I have sitting in the bank, and I think, why not just use a part of it to buy a car outright? The downsides, as I see them, is that I would be plunging a lot of money into a depreciating asset, and that when/if I ever do buy a house, part of my downpayment money would be gone. It would take a long time for me to save up that money again; I should be a little less financially strapped and able to save more when I'm not having to pay quite so much for child care, but that's about four years from now when my child starts school.

What would you do?