I'll try to be brief-ish.
Actively searching for my first 'real' car.
Real in the senses that it'll be 00+ and will cost a 'bit' more than my current high score of $3700.
(Budget is up to 25k)
So, thanks to things like saving well and driving E36 M3ty cars up until now, I have the option of paying cash.
I've zero debt, no plans to buy anything resembling a house any time soon, pay into my 401k every month, have some solid stock assets... and no children/swmbos/whatever that might otherwise complicate my financial situation.
Any reason not to pay cash?
Depends on how risk adverse you are. If you can borrow the money at 2% and leave your money earning 6%, you are money ahead.
Personally, I'd pay cash and not have to worry about a payment every month.
Yes.
1) build credit
2) if interest is less than inflation.
3) if investment dividends and a apreciation is greater than interest rate.
I'm sure there is more I'm not thinking of..
In reply to NordicSaab:
Good points.
Last I checked my credit was excellent, and I've no reasons to suspect that's changed since.
Bought into Tesla a while ago (yesterday, yikes) and haven't found anything else compelling enough to throw down on, so it's not like I have any direct competition for the money, other than beer :P
Have you got a six month stash of cash already, even after buying the car?
With good credit, you should be able to score a very attractive interest rate. I'd consider borrowing some of the money.
In reply to 1988RedT2:
Yes, and good point, respectively.
Problem is, afaik, that the bank (CU in this case) might balk at loaning money for an 'older' car
NordicSaab wrote:
Yes.
1) build credit
2) if interest is less than inflation.
3) if investment dividends and a apreciation is greater than interest rate.
I'm sure there is more I'm not thinking of..
- Who cares?
- Impossible.
- Impossible without considerable risk (you want to be holding the bag?)
So, pay cash and get what you want.
Yes. unless you can't get the 1-2% interest rates that are all over there is no reason at all to pay cash. Take advantage of the crazy cheap money while you can. If you get to a point where the returns on the investment are lower than the interest rates then cash out the investment and pay off the loan. Run your personal finances just like a business.
I mean even my house is under 2.5% interest rate now and that is my most expensive debt. I get 3.5% Dividend yield from my GE stock and it's very stable in the price. It's almost like an annuity.
SnowMongoose wrote:
In reply to 1988RedT2:
Yes, and good point, respectively.
Problem is, afaik, that the bank (CU in this case) might balk at loaning money for an 'older' car
You are quite right. You won't likely get a good rate on an "old" car. Sounds like you should be paying cash.
When I was young I did this. No kids was making between 80&100k a year and only paid 400 a month rent.
However with a nice car came nice girls really nice girls if you get my drift. Three years later I was selling cars to purchase a house for the then new wife and 1.5 kids.
Keep your money in the bank and get a readable car. Say 10-15k. For a really nice DD.
TRUST ME ON THIS. 
Aircooled 911. Car and investment.
I got destroyed for my personal finances on this board last weekend so take this for what it's worth.
The only reason I got a loan for my bike was to build credit because I was planning to buy a house in a couple years. In my opinion if you have no debt and have no plans on buying a house and can afford to pay cash for what you want there is no reason to finance a vehicle.
You know what's cheaper than 1-2% interest? Zero% because you paid cash for it. Take the payment you would be making and stick it back in the investments if that's where you pull them from.
Beware of depleting your reserves. There is a good reason to keep cash reserves.
Its not an all or nothing either. You could pay some cash, finance the rest, and keep a good cash reserve.
Dr. Hess wrote:
NordicSaab wrote:
Yes.
1) build credit
2) if interest is less than inflation.
3) if investment dividends and a apreciation is greater than interest rate.
I'm sure there is more I'm not thinking of..
1. Who cares?
2. Impossible.
3. Impossible without considerable risk (you want to be holding the bag?)
So, pay cash and get what you want.
Wth are you talking about?
1) banks care if you ever want to buy a home
2) very possible. Inflation is hovering around 1.7%
3) invest in blue chip and composite funds and your risk is minimal.
If I were in your shoes, the only reason I would finance is if my short term plans included buying a house and paying for the car cash would dip into my down payment fund. Otherwise, keep debt as low as possible.
By the way, about buying a house: having one that's paid for come retirement time means it sure is nice to not have to worry about a mortgage payment or rent each month coming out of your retirement funds.
SnowMongoose wrote:
I'll try to be brief-ish.
Actively searching for my first 'real' car.
Real in the senses that it'll be 00+ and will cost a 'bit' more than my current high score of $3700.
(Budget is up to 25k)
So, thanks to things like saving well and driving E36 M3ty cars up until now, I have the option of paying cash.
I've zero debt, no plans to buy anything resembling a house any time soon, pay into my 401k every month, have some solid stock assets... and no children/swmbos/whatever that might otherwise complicate my financial situation.
Any reason *not* to pay cash?
when I bought my Sonic, I asked my broker pretty much the same question … though in my case it would have meant pulling ~$20 from my Roth IRA
he said that since I was able to get 1.49% financing he said to pay as much down as I was comfortable with, and finance the rest … if the % had been higher he said I would have been better off paying cash
Toyman01 wrote:
Depends on how risk adverse you are. If you can borrow the money at 2% and leave your money earning 6%, you are money ahead.
Absolutely this. And if you can't beat 2% over the life of the car loan, you totally fail at finances.
