Professor Polo
80s Baby
Yeah this articles on point...one of the worst investments you can make. You're being charged interest on an asset that's depreciating in value.
Four Reasons Why You Should Never, Ever Finance A New Car
- Thread starter Ricky Church
- Start date
philmonroe
Superstar
Not really depends if you going to use that potential car money to invest or not. If your not going to invest the money probably a good deal but otherwise probably not esp if you get a good rate
Professor Polo
80s Baby
I mean a car is the 2nd biggest investment the average person makes behind home ownership. The moment the car leaves the lot, you've lost money. After a year your 1 year old car prob depreciated roughly 25% depending on the miles you've put on. Your car is going to continue to go down in value as time goes on, and you're paying interest, regardless of the rate unless it's 0%, on an asset that is no longer worth that money.
philmonroe
Superstar
That's why I somewhat I agree the avg person isn't investing the money so why not pay cash but for those that do they probably better off doing that. You might pay a few thousand in interest but if you can use that money you're going to use to pay off the car to make more money why not? People do this all the time but most people aren't investing their money so I agree with for most people. I'm just saying their are good reasons to not pay all cash for your car.
KravenMorehead™
Barrel Brothers.®
I've worked as a car salesman before.
Cats coming in upside down on their payments
Cats coming in upside down on their payments
Financed 2010 sonata for six years a couple years ago
OneManGang
Veteran
So lets say i have 30,000 dollars. I CAN buy a new car lets say $27,000 car straight cash. But some people are saying it makes sense to actually still finance it (if the interest rate is reasonable) because I can use that cash to build more wealth potentially doing some other investment in the meantime instead of throwing it all away at once? Just pay the monthly payments and have more disposable income during the lifetime of the loan? Am I getting this right? @LordTaskForce
Keeps repo men employed.I've worked as a car salesman before.
Cats coming in upside down on their payments
It depends.
If you are pulling down over $200,000 a year, then it doesn't matter that much whether you lease, buy out-right or finance for a $27,000 car. The interest on the lease or financing is marginal compared to your income. If you are earning less than $60,000 a year, then the interest in the life of the loan can make a difference in your total personal finance growth.
If you put down $4,000 (these are example numbers) and then finance the remainder, you have $23,000 to invest. Depending on how good you are at investing or bad, you may not be able to break even. That is to earn enough interest in your investments to cover the amount you paid out in interest in the car loan. And you may pay more in interest in the loan if you don't earn enough in your investments. Or you may earn more interest in your investment than what you paid out in the car loan. If you aren't investment saavy, this is a big gamble.
The other thing is it takes money to make money. You might spend less than $27,000 on a car in order to put more money into the business. Or, you buy a vehicle as a business expense and write off the depreciation each year in itemized deductions. If you aren't a sole proprietor of a business, then this doesn't apply.
Say, you find a car that has 0% financing because your credit rating is good and you can finance it over 60 months. Do you just put the minimum down payment and finance the rest? Use the remainder from $27,000 to invest. Yes and no. Yes, because you can't beat 0% financing. No, on American cars because the depreciation is going to drop like a log in a river. It would be great for a car like a Lexus, but they rarely offer 0%.
Some people use financing to build credit. 
But buying a car off the lot that's brand new is never smart, but if you got the cash, you got the cash. I personally opt for a low cost car, just decent enough to be proud of, but not good enough to have work my life around payments/maintenance.
But buying a car off the lot that's brand new is never smart, but if you got the cash, you got the cash. I personally opt for a low cost car, just decent enough to be proud of, but not good enough to have work my life around payments/maintenance.
You walk in with straight cash, you run the show.
I paid my altima off in feb 13...at just over 4 years of ownership.
i think i won....6 year old car now, 36k miles, no problems. not so much as even a tire pressure light. still worth about 10K, paid 20k for it. keeping that bytch for as long as possible.
i think i won....6 year old car now, 36k miles, no problems. not so much as even a tire pressure light. still worth about 10K, paid 20k for it. keeping that bytch for as long as possible.
88m3
Fast Money & Foreign Objects
if you have good credit your interest rate is negligible if there is even is any at all.
Perpetual Beast
Beast Mode Always On
I hate dumbass, pianfully obvious articles like these, which seem to circulate the net frequently...fukkin lazy ass writers...
mcdivit85
Superstar
Even though I'm not a huge fan of car payments, this is another factor that comes into play. If you have good credit, and you get damn near no interest on the loan, then all this kinda goes out the window.
Peace