re: Financing vs. cash

Agree with Foshizzel on this one. Here is my wife and my last experience.

In 2011 we bought a new car for the first time in a long time. Long story but I’ll stick to the financing side.

We didn’t tell them we wanted to pay in cash until we agreed on a price. At that time we said we wanted to put the entire purchase on a credit card. We have with a high enough limit on it to cover the purchase. They agreed. We had the cash to pay off the credit card in full when they bill came. We wanted the 2% cash back we get from the credit card. When it came time to swipe the card they told us that we could only put 5% of the purchase price on the card. We walked away. After a short time they contacted us and said they would give us 1% financing. We weren’t happy but decided to get the car because it was a good price on a car that had what my wife wanted and didn’t have what she didn’t want. We used the credit card for the 5% down which we paid off as soon as the bill arrives. I took half of the rest of the money we had in a money market account that we had used to save for the car and put it in Vanguard Wellesley mutual fund. From July of last year to June of this year it is up about 10%.

The bottom line, so far at least, is that low financing worked better for me than cash.