- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Cash vs finance vehicle
Posted on 12/1/15 at 9:22 pm
Posted on 12/1/15 at 9:22 pm
Technically I could pay for a new truck cash. When is this a good idea? I'm assuming a large part will depend on interest rate I could get. Likely won't be able to get much more life out of current vehicle so saving up too much longer isn't really an option.
I know I'm not providing any specifics but what are the general rules
I know I'm not providing any specifics but what are the general rules
7
Posted on 12/1/15 at 9:37 pm to jimbeam
Depends on your needs/wants, financial situation, cost of the vehicle, and lastly, your interest rate. If you are hell bent on paying cash, just pay half of it in cash and invest (or do what you want with the rest). Imo paying all cash for any vehicle over $10,000 isn't very smart.
Posted on 12/2/15 at 6:22 am to 13SaintTiger
quote:
mo paying all cash for any vehicle over $10,000 isn't very smart.
Yep, at 10k or under just pay it in cash and get it over with since it's not a really large sum. I think it's crazy to tie up much more than that in cash if you're able to get <3% interest rates though. You can get better returns elsewhere, and you aren't putting yourself in a low cash for emergency situation.
Posted on 12/2/15 at 7:11 am to jimbeam
If I knew there was no risk in losing my job, I would always finance a vehicle.
Posted on 12/2/15 at 7:20 am to jimbeam
Paying cash for anything provides an amazing piece of mind that is difficult to value
Posted on 12/2/15 at 8:59 am to 756
quote:
Paying cash for anything provides an amazing piece of mind that is difficult to value
What happens to that cash if you finance it? You just blowing it on hookers and blow? Or is it still available to you, at any time, to fully pay off the vehicle, still providing the "peace of mind".
What about the peace of mind knowing you only have to pay a little bit per month on a vehicle vs having a reserve emergency fund on hand? And you could always sell the vehicle and get into a cheaper vehicle if it was dire straits.
At 0-3% interest, it makes absolutely zero financial sense to pay cash for a vehicle. If you are not financially resolve, then it is a way to "invest" the money at a guaranteed rate so you don't spend it (or risk losing it) elsewhere. That's it.
Posted on 12/2/15 at 6:17 pm to LSUtigerME
quote:
What happens to that cash if you finance it? You just blowing it on hookers and blow? Or is it still available to you, at any time, to fully pay off the vehicle, still providing the "peace of mind".
What about the peace of mind knowing you only have to pay a little bit per month on a vehicle vs having a reserve emergency fund on hand? And you could always sell the vehicle and get into a cheaper vehicle if it was dire straits.
At 0-3% interest, it makes absolutely zero financial sense to pay cash for a vehicle. If you are not financially resolve, then it is a way to "invest" the money at a guaranteed rate so you don't spend it (or risk losing it) elsewhere
Perfect.
Posted on 12/2/15 at 7:47 pm to jimbeam
It mostly depends on the interest rate you can get. For example, if you're offered terms of 2% for five years, then paying cash is essentially the same as investing in a 5 year CD that pays 2%. If you'd be happy investing in such a CD, then pay cash (not likely). If you're offered 10% for three years, you'd be crazy not to pay cash.
Posted on 12/3/15 at 8:45 am to jimbeam
So last weekend my brother in law went to buy a slightly used truck. He offered 33K in cash, total, with all fees and taxes. This is because my sister in law told him to do that. Apparently the salesperson thought this was the dumbest idea ever, and basically insulted my BIL and SIL and said they had no idea how car shopping works, and had no idea how finances work. Since it was a used truck and they have good credit, they were offered a rate of 3.99%. Apparently a shouting match resulted and they walked out the dealership.
The salesperson lost the deal because he didn't want them to pay in cash.
Now I know the dealership makes money off the financing, but I thought this was insane.
The salesperson lost the deal because he didn't want them to pay in cash.
Now I know the dealership makes money off the financing, but I thought this was insane.
Posted on 12/3/15 at 8:51 am to LSUFanHouston
quote:
The salesperson lost the deal because he didn't want them to pay in cash.
I'd terminate his employment.
Posted on 12/3/15 at 10:40 am to jimbeam
As a rule for low or zero interest I borrow as much as I can and use the cash for other things. Everything from the kitchen fridge to my wife's jewelry is usually a 2-3 same as cash plan.
This dilemma comes up often. There's a lot of people who think that if they "suddenly" came upon say $200k the wise move would to pay off mortgage remove all debt regardless of interest.
This dilemma comes up often. There's a lot of people who think that if they "suddenly" came upon say $200k the wise move would to pay off mortgage remove all debt regardless of interest.
Posted on 12/3/15 at 12:38 pm to Jp1LSU
quote:
There's a lot people who think that if they "suddenly" came upon say $200k the wise move would to pay off mortgage remove all debt regardless of interest.
For a lot of people it would be a smart move because a lot of people aren't good with money.
Posted on 12/3/15 at 1:22 pm to 13SaintTiger
quote:
For a lot of people it would be a smart move because a lot of people aren't good with money
People who aren't good with money will find ways to spend it, cash or not. Now with no house payment they will simply spend their mortgage payment on stupid shite.
Posted on 12/3/15 at 6:26 pm to LSUFanHouston
LSUFanHouston, it's not in the dealerships best interest to sell an almost new truck like that for cash. Most likely it was a truck that originally sold new, was returned a year or two later for another new one. They put all the commission in the used one and need better than a 33k advance from a bank to make what they think they should make on it. Of course this changes the longer they have the truck and if they know the truck is not popular etc. They could sell that truck and put 33k on paper, but still get a 35k advance, plus ANOTHER TRADED IN TRUCK a little older, to make another $2500 on. In new or used car sales the money is not in the new trucks but the used ones. They want to finance high plus solicit a trade to repeat cycle.
Posted on 12/3/15 at 6:48 pm to jimbeam
Always pay cash for depreciating assets if you can.
Borrow if you must to buy appreciating assets.
Borrow if you must to buy appreciating assets.
Posted on 12/3/15 at 7:03 pm to I B Freeman
Always pay cash for depreciating assets if you can.
Blanket statements like this are stupid since you're going to pay for it either way. It is important to look at the opportunity costs of giving up a large sum of money and what you could have otherwise done with it.
Blanket statements like this are stupid since you're going to pay for it either way. It is important to look at the opportunity costs of giving up a large sum of money and what you could have otherwise done with it.
Posted on 12/3/15 at 9:21 pm to GoldenD
If paying cash for a vehicle rather than financing at 0-3% is a significant financial decision it's because the car you're buying is too expensive. Because while the on-paper answer is that financing anything at 0-3% and investing cash is advantageous, the real-life answer, in my opinion, is that your vehicle costs should be a drop in the bucket to your overall cash/investing/financial picture. If it isn't, you need to focus on more important things than how to game a couple percentage points on a car loan.
Posted on 12/4/15 at 6:59 am to Huey Lewis
A vehicle that is too expensive is relative. While you may only see a vehicle as a tool to transport you from one location to another, others may also use it as a hobby or just to get plain enjoyment out of it. Plus, if you aren't "gaming" for a couple points you aren't going all in on your overall financial picture.
At a certain point investing just for the sake of having more money for retirement doesn't bring more happiness in life. Sometimes it's better to have balance of enjoying things and experiences now rather than later.
At a certain point investing just for the sake of having more money for retirement doesn't bring more happiness in life. Sometimes it's better to have balance of enjoying things and experiences now rather than later.
Posted on 12/4/15 at 8:27 am to GoldenD
quote:
A vehicle that is too expensive is relative. While you may only see a vehicle as a tool to transport you from one location to another, others may also use it as a hobby or just to get plain enjoyment out of it. Plus, if you aren't "gaming" for a couple points you aren't going all in on your overall financial picture.
Let's say you have $40,000 cash in hand and want to buy a $40,000 car. If my calculations are correct, the total repayment amount on a $40,000 car over 60 months at 1.9% with zero down is $41,961.71 at $699.36 a month.
$40,000 invested at 8% for 5 years at 15% tax rate is $55,580 minus $1,961 spent on 1.9% car interest rate over that period = $53,618.
$40,000 cash used to buy the car with $699 invested the same way results in $51,312.
I propose that while nobody should just "throw away" the difference of $2,306, that amount spread over five years ($38.43 a month) should be insignificant to anyone spending $40,000 on a depreciating item. I get the whole idea of having a balance between saving money and enjoying money. My point in the earlier post was just that the car is too expensive for the person in question or that his financial priorities are misaligned if the differences between paying cash and financing at a low rate on a car are an important part of the purchasing scenario.
This post was edited on 12/4/15 at 8:29 am
Posted on 12/4/15 at 9:15 am to Huey Lewis
quote:
I propose that while nobody should just "throw away" the difference of $2,306, that amount spread over five years ($38.43 a month) should be insignificant to anyone spending $40,000 on a depreciating item.
I can agree with you here, but personally I feel a lot better having $40k available to me than having a $700 cash flow over 5 years. Combining that with the additional 2,300 makes it an easy decision. Others may enjoy the piece of mind of not having a bill each month - different strokes I suppose.
Page 1 of 2
Back to top
Follow TigerDroppings for LSU Football News