Anonymous wrote:I wonder how many people would actually buy a $30K car if it had to be paid for in cash...

This is the key issue. This thread is actually two conversations. One about whether or not people are buying too much car because cheap loans are available. And another one on interest rate arbitrage (borrow cheap, invest at a higher rate).

Here is the rule to live by for car purchase:

IF:

1) you can afford to pay cash up front, no problem

and

2) you invest the money that you are not spending to pay cash for the car

THEN:

it is rational and sensible to borrow money at near-zero interest rates to borrow the car.

The problem is that in most cases, people use cheap car loans to buy cars that they could not afford to buy with cash. In these cases, the rational thing is to buy a cheaper car. A "reliable" safe car can be bought used for $8,000 or less. If you spend anything more on a car, it should be because you can easily afford it with cash.

Finally, another good rule of thumb is try to avoid spending more than one month gross salary, max two months, on a car.

Anonymous wrote:

Anonymous wrote:Not op but I buy used cars I can afford and pay cash. Simple. The have an have not mentality is sending this generation to an early grave.

And those cars cost how much?

Just bought a 2007 Sienna for $12,500. Paid cash. Last car was a 1999 Sienna bought in 2004. Drove it ten years got $3500 out of it when I sold it on Craigslist. New car has 65k miles on it.

Anonymous wrote:

Anonymous wrote:I wonder how many people would actually buy a $30K car if it had to be paid for in cash...

Exactly. I know very few people who can just pay that outright. Even used cars are more than most can pay OOP.

What do you think someone should do who needs a reliable automobile but has no money to really spare and doesn't work in a high-paying job?

This is reality for many, many people.

They buy a reliable car that costs less than $30k. This isn't that hard of a concept.

Anonymous wrote:Not op but I buy used cars I can afford and pay cash. Simple. The have an have not mentality is sending this generation to an early grave.

And those cars cost how much?

Not op but I buy used cars I can afford and pay cash. Simple. The have an have not mentality is sending this generation to an early grave.

Anonymous wrote:

Anonymous wrote:So is it stupid to buy the car in cash if you have the cash?

No. Most DCUMers just live to pay bills.

My fixed expenses are all on auto-pay. I literally don't event think about my car payment. It took 10 minutes to set up. Meanwhile, my money earns more in the market than the interest rate on my car loan. Explain to me what doesn't make sense about this?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Um how is this stupid? I'm looking for a car and can get 0%, why wouldn't I put down as little as possible?

How are you able to get 0%?

np. I bought my toyota highlander last year at 0% interest rate. Toyota financing was running a special and I had good credit. I also put my down payment on my amex so I could get the membership reward points.

But don't you need gap insurance? And, your credit score takes a little hit because you are financing. Plus, the administrative hassle. At the endvof the day why not buy it outright and be done with it?

We did 5000 down on a 60000 suv with a 1.0% interest rate. We boosted our investing in to stocks.

Anonymous wrote:So is it stupid to buy the car in cash if you have the cash?

If you take the view that your money could be earning higher interest invested somewhere else, then yeah, it's stupid. I would rather get the transaction over with and don't care so much about my money earning money somewhere else, so I usually buy cars outright using cash.

Anonymous wrote:I wonder how many people would actually buy a $30K car if it had to be paid for in cash...

Exactly. I know very few people who can just pay that outright. Even used cars are more than most can pay OOP.

What do you think someone should do who needs a reliable automobile but has no money to really spare and doesn't work in a high-paying job?

This is reality for many, many people.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Um how is this stupid? I'm looking for a car and can get 0%, why wouldn't I put down as little as possible?

How are you able to get 0%?

np. I bought my toyota highlander last year at 0% interest rate. Toyota financing was running a special and I had good credit. I also put my down payment on my amex so I could get the membership reward points.

Another NP here. I bought a 2015 Mazda earlier this month at 0% interest and put $8k down (also used my AmEx for rewards points! But my dealer said they had a $5k max on credit cards, so I did that and a $3k check). Financed nearly $20k. It's a 5 year loan.

This also sounds good. Will have to watch for 0% deals.

PP here. Mine was on Labor Day sale. At this point, wait for Christmas/New Years sales. Toyota also does 0% much more often than random promotions, which is usually the only time that most brands offer 0%.

Also, there was no charge to me for putting part of my down payment on my credit card, but my dealer said they had a $5k limit because of the credit card deae that the merchants have to pay for that transaction. So they absorb that cost. I did it to get credit card points and I still have a 0% intro APR on my AmEx for another few months so the impact of the large down payment is lessened and I can break up paying it into chunks. It really worked out great.

Credit card *fee*. Damned autocorrect.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Um how is this stupid? I'm looking for a car and can get 0%, why wouldn't I put down as little as possible?

How are you able to get 0%?

np. I bought my toyota highlander last year at 0% interest rate. Toyota financing was running a special and I had good credit. I also put my down payment on my amex so I could get the membership reward points.

Another NP here. I bought a 2015 Mazda earlier this month at 0% interest and put $8k down (also used my AmEx for rewards points! But my dealer said they had a $5k max on credit cards, so I did that and a $3k check). Financed nearly $20k. It's a 5 year loan.

This also sounds good. Will have to watch for 0% deals.

PP here. Mine was on Labor Day sale. At this point, wait for Christmas/New Years sales. Toyota also does 0% much more often than random promotions, which is usually the only time that most brands offer 0%.

Also, there was no charge to me for putting part of my down payment on my credit card, but my dealer said they had a $5k limit because of the credit card deae that the merchants have to pay for that transaction. So they absorb that cost. I did it to get credit card points and I still have a 0% intro APR on my AmEx for another few months so the impact of the large down payment is lessened and I can break up paying it into chunks. It really worked out great.

I wonder how many people would actually buy a $30K car if it had to be paid for in cash...

PP again. Why are the companies giving 0% financing? Are they having trouble selling cars or is it end of the year clearance deals?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Um how is this stupid? I'm looking for a car and can get 0%, why wouldn't I put down as little as possible?

How are you able to get 0%?

np. I bought my toyota highlander last year at 0% interest rate. Toyota financing was running a special and I had good credit. I also put my down payment on my amex so I could get the membership reward points.

Another NP here. I bought a 2015 Mazda earlier this month at 0% interest and put $8k down (also used my AmEx for rewards points! But my dealer said they had a $5k max on credit cards, so I did that and a $3k check). Financed nearly $20k. It's a 5 year loan.

This also sounds good. Will have to watch for 0% deals.