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When should you buy a car with cash vs financing at 0%?
Posted on 11/21/16 at 3:43 pm
Posted on 11/21/16 at 3:43 pm
I have enough cash to buy a new car, but I can get 0% financing (for first 4 years). At first, it seemed like a no brainer to just finance the car and invest my cash, right? Or will a dealership really give you a huge markdown if you pay in cash?
For instance, let's say I want to by a car that I can get at a fair price for $35K (not MSRP). If I work the salesman down to that price and then say, "how much can you offer if I pay cash?", will he come down at all. If I took that $35K and reinvested it in an index, and withdrew from it each month to make my payments, I should probably make anywhere from $3.3K to $6.6K return on investment (assuming a conservative 4-6% range). Has anyone ever had an experience where they received significant discount in buying with cash to justify not reinvesting money?
For instance, let's say I want to by a car that I can get at a fair price for $35K (not MSRP). If I work the salesman down to that price and then say, "how much can you offer if I pay cash?", will he come down at all. If I took that $35K and reinvested it in an index, and withdrew from it each month to make my payments, I should probably make anywhere from $3.3K to $6.6K return on investment (assuming a conservative 4-6% range). Has anyone ever had an experience where they received significant discount in buying with cash to justify not reinvesting money?
This post was edited on 11/21/16 at 3:46 pm
7
Posted on 11/21/16 at 3:51 pm to SUB
As a auto sales person, we hear 'what is your best cash price', all the time. Dealership would rather you finance, get a kick back from finance company. So would go with 0% if I was you. What brand are you looking at?
Posted on 11/21/16 at 4:00 pm to SUB
0% all day. i love free money.
Posted on 11/21/16 at 4:24 pm to SUB
quote:
0% all day.
Posted on 11/21/16 at 7:48 pm to SUB
If you take 0% you usually have to give up any incentives. Take that into consideration also.
Posted on 11/21/16 at 8:01 pm to SUB
Pay cash if you have it. Even at 0% you'll just go out and spend money on something else. Pay the cash and you'll be focused on replenishing the cash. You'll thank yourself in a year !
Posted on 11/22/16 at 9:13 am to SUB
quote:
I should probably make anywhere from $3.3K to $6.6K return on investment
I work at a Toyota dealership and it depends on what car you are purchasing. We will discount the Camry $6000 if you finance through SETF, if you pay cash we discount it $4000. I am sure most dealerships would be the same. The $3.3k to $6.6k is much greater than the $2000 you would save.
Posted on 11/22/16 at 9:36 am to SUB
Free money is my preference. I don't need someone else to hold my money for me because of discipline issues.
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