Anonymous wrote:

Anonymous wrote:I don't know why the financial acumen on this board is so terrible. Is everyone just a government drone who majored in poli sci or grievance studies? The economic answer is NOT "only finance when it is a low rate like 0% or 0.9%" as several people have parroted. The answer is that you finance when the finance rate is lower than the rate of return you would earn by investing the money.

Please tell me what rate I am guaranteed to earn on my stock investments.

Well right now I can earn ~5% guaranteed in a CD.

However, I still would pay cash and only take a low rate loan to get a decent rebate. Just simpler to not have the loan and yes a guaranteed rate of return.

Anonymous wrote:

Anonymous wrote:I don't know why the financial acumen on this board is so terrible. Is everyone just a government drone who majored in poli sci or grievance studies? The economic answer is NOT "only finance when it is a low rate like 0% or 0.9%" as several people have parroted. The answer is that you finance when the finance rate is lower than the rate of return you would earn by investing the money.

That's the same thing, but the first option avoids spending a lot of time and/or money and variance risk to make the measurement.

+1

Plus paying cash ensures that you are not "spending the money on something else". Many people have issues not spending money if it's available. So simply paying for a car with cash removes that money from any chance of not saving it.

Have not taken a car loan for over 25 years, except the one time to get $2K rebate/discount and 0.9% interest and I paid that off the first month.

Anonymous wrote: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?

I paid with a personal check. The dealer wouldn't take my credit card, or I would have put the entire thing in my rewards card.

They check immediately if the check is good. It's just like using a credit card.

Anonymous wrote: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?

I've bought every car I've ever owned in cash. I'm a thrifty person, and I don't buy a car until I have enough cash saved.
I'm not buying Teslas and Lexi, though. I've bought Honda, Subaru, Toyota, Kia in cash.

I research the cars thoroughly on Consumer Reports, and choose the best value car that has the best service and longevity record.

I've never calculated the amount of money I've saved, but I've kept my cars for 15 years or more.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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?

We bought a car a few weeks ago with a personal check.

+1

We put ours on our debit card. We did call the bank to authorize the payment, but it took like 2 minutes.

Actually, we put like 3k on a rewards card (the max they'd allow) and then the balance on the debit card, so we can get some free flights out of the deal.

Anonymous wrote:

Anonymous wrote:I don't know why the financial acumen on this board is so terrible. Is everyone just a government drone who majored in poli sci or grievance studies? The economic answer is NOT "only finance when it is a low rate like 0% or 0.9%" as several people have parroted. The answer is that you finance when the finance rate is lower than the rate of return you would earn by investing the money.

Please tell me what rate I am guaranteed to earn on my stock investments.

Use the risk-free rate, which is the rate you get if you put the money in a CD or savings accounts. It's "risk-free" since it's FDIC-insured adn you wont' lose your principal. Curently I get 4.55% from Wealthfront, while my mortgage is a fixed 3.25%, so I'm in no rush to pay down my mortgage faster than required (I used to).

Anonymous wrote:

Anonymous wrote: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?

We bought a car a few weeks ago with a personal check.

+1

Anonymous wrote:I finance. Interest rates on new cars are relatively low, and I like to have the liquid funds available to invest in the market.

No guarantee, of course, but over time I think it works out and I do like having access to the liquidity I get with my cash when I borrow instead of paying all cash up front.

On most cars this is not true recently. And even companies offering a good promotional interest rate also offer a cash rebate for those not financing. Usually its an either/or situation.

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Anonymous wrote:

Anonymous wrote: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.

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.

We do that every single time. I tell the finance guy that we'll take terrible terms in exchange for a discount. Dealership makes the first payment (they need one payment to get their rebate) and then we pay off the whole thing.

The dealer knows what is going on. They still get the rebate from the manufacturer. PP's "guy" friend isn't putting one over on the dealer, they are well aware and don't care.

That's the point. We let them make the first payment so that they can ensure they get their payment from the finance company. If you pay it off before then, they don't get a rebate. We learned this one years ago from a finance manager who said they'd been screwed by these deals in the past and now insisted on the dealership being responsible for the first payment.

So is this a good way to “negotiate” these days? Just say you want an 84 month loan and they’ll offer to make the first payment for you? And this will be more likely to make them bend a bit on the price?

No, you talk to the finance guy and say that you can pay cash or finance and that you don't have a preference and that you are willing to take a loan product that works for them if they are willing to move on the price.

Got it, thanks. So they get a kickback from a third party who is not at the table (as long as you or they make the first payment on the loan) and you don't have to hide that you have the cash to pay off the loan ASAP?

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

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.

We do that every single time. I tell the finance guy that we'll take terrible terms in exchange for a discount. Dealership makes the first payment (they need one payment to get their rebate) and then we pay off the whole thing.

The dealer knows what is going on. They still get the rebate from the manufacturer. PP's "guy" friend isn't putting one over on the dealer, they are well aware and don't care.

That's the point. We let them make the first payment so that they can ensure they get their payment from the finance company. If you pay it off before then, they don't get a rebate. We learned this one years ago from a finance manager who said they'd been screwed by these deals in the past and now insisted on the dealership being responsible for the first payment.

So is this a good way to “negotiate” these days? Just say you want an 84 month loan and they’ll offer to make the first payment for you? And this will be more likely to make them bend a bit on the price?

No, you talk to the finance guy and say that you can pay cash or finance and that you don't have a preference and that you are willing to take a loan product that works for them if they are willing to move on the price.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

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.

We do that every single time. I tell the finance guy that we'll take terrible terms in exchange for a discount. Dealership makes the first payment (they need one payment to get their rebate) and then we pay off the whole thing.

The dealer knows what is going on. They still get the rebate from the manufacturer. PP's "guy" friend isn't putting one over on the dealer, they are well aware and don't care.

That's the point. We let them make the first payment so that they can ensure they get their payment from the finance company. If you pay it off before then, they don't get a rebate. We learned this one years ago from a finance manager who said they'd been screwed by these deals in the past and now insisted on the dealership being responsible for the first payment.

So is this a good way to “negotiate” these days? Just say you want an 84 month loan and they’ll offer to make the first payment for you? And this will be more likely to make them bend a bit on the price?

We just bought a new minivan with cash (well a personal check). I believe we were told the interest rate to finance was 6% (or something ridiculous like that despite out 800+ credit scores).

Anonymous wrote:

Anonymous wrote:We buy used cars for cash. I’m a little rough on cars and there will be damage before long. I don’t want to worry about a brand new car.

+1 Came here to say that it is best financially to buy a used car in cash.

It's not bad to buy a new car with cash if you plan to keep it for awhile. We keep our cars 8-10+ years. Prefer to buy new, and don't feel bad about doing that. Still driving my 13+yo car and no plans to replace it yet.

I finance. Interest rates on new cars are relatively low, and I like to have the liquid funds available to invest in the market.

No guarantee, of course, but over time I think it works out and I do like having access to the liquidity I get with my cash when I borrow instead of paying all cash up front.

Anonymous wrote:We buy used cars for cash. I’m a little rough on cars and there will be damage before long. I don’t want to worry about a brand new car.

+1 Came here to say that it is best financially to buy a used car in cash.