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Car Finance vs Pay Cash
Posted on 9/2/22 at 1:49 pm
Posted on 9/2/22 at 1:49 pm
I searched this topic and the advice I found was from about 10 years ago, so apologies if it’s been addressed recently.
I need to buy a car. I put a deposit down on a vehicle that costs $31,000. I have the ability to pay cash but I’m wondering what makes the most sense to pay the least amount in interest but also help my credit score.
Interest rate per the dealership website is about 6%. My only other debt is a student loan of about $20k and a credit card which I pay off monthly. My home was bought through a private sale where a family member bought it outright and then mortgaged it to me, and I pay them directly. I don’t believe it is included in credit reports.
Based on this, should I pay cash? Finance half, or a smaller portion? My last car was financed at 0.9%, so it made sense to pay a note.
I need to buy a car. I put a deposit down on a vehicle that costs $31,000. I have the ability to pay cash but I’m wondering what makes the most sense to pay the least amount in interest but also help my credit score.
Interest rate per the dealership website is about 6%. My only other debt is a student loan of about $20k and a credit card which I pay off monthly. My home was bought through a private sale where a family member bought it outright and then mortgaged it to me, and I pay them directly. I don’t believe it is included in credit reports.
Based on this, should I pay cash? Finance half, or a smaller portion? My last car was financed at 0.9%, so it made sense to pay a note.
14
Posted on 9/2/22 at 1:52 pm to Rick9Plus
quote:
My only other debt is a student loan of about $20k
What’s the interest rate on the student loan?
Posted on 9/2/22 at 1:56 pm to Rick9Plus
I always charge 5K on my credit cards for the points. Then just pay it off the following month. That’s the most dealership have allowed me without a fee
Posted on 9/2/22 at 1:56 pm to Rick9Plus
quote:
My home was bought through a private sale where a family member bought it outright and then mortgaged it to me, and I pay them directly. I don’t believe it is included in credit reports.
This seems ripe for you to be taken advantage of.
Posted on 9/2/22 at 1:57 pm to Rick9Plus
I would buy a $20,000 car in cash and throw the rest at the student loans.
Posted on 9/2/22 at 1:57 pm to Jag_Warrior
quote:
What’s the interest rate on the student loan?
6.8%. I’m also not too proud to say that all 20k looks to be possibly erased if Uncle Joe keeps his promise. Not holding my breath but it’s possible. I also haven’t been sitting on the cash I have to possibly pay cash for the car for very long. It’s the insurance payout on my previous car, which was totaled and the other guy’s insurance company just paid me for it.
Posted on 9/2/22 at 1:58 pm to Billy Blanks
quote:
This seems ripe for you to be taken advantage of.
I would trust this person with my life.
Posted on 9/2/22 at 1:59 pm to Rick9Plus
quote:
’m also not too proud to say that all 20k looks to be possibly erased if Uncle Joe keeps his promise.
Never mind then.
I would just pay the car off and live debt free if possible.
Posted on 9/2/22 at 2:02 pm to Rick9Plus
Either pay cash or work the market (are stocks/funds on sale?).
Gauge your risk tolerance and move from there.
Gauge your risk tolerance and move from there.
Posted on 9/2/22 at 2:02 pm to Ostrich
quote:
Never mind then. I would just pay the car off and live debt free if possible.
That’s what I’m thinking. The student loan started at 60k and I’ve got it down to 20. I would only have the mortgage, which is about $175k. I’m just worried that I will have “no credit” as far as the credit agencies know, and if I need credit in the future I worry about the impact.
Posted on 9/2/22 at 2:04 pm to Rick9Plus
quote:
as far as the credit agencies know, and if I need credit in the future I worry about the impact.
What are examples in the future and roughly how far into the future would they be?
Posted on 9/2/22 at 2:06 pm to meansonny
quote:
Either pay cash or work the market (are stocks/funds on sale?).
Gauge your risk tolerance and move from there.
Also good advice. In my experience, risk tolerance is higher when you don't have debt
Posted on 9/2/22 at 2:10 pm to meansonny
quote:
What are examples in the future and roughly how far into the future would they be?
Good question lol. Only thing I can think of, I have a kid in high school and one in college. They both drive cars that could crap out at any time. That’s pretty much it.
Posted on 9/2/22 at 2:15 pm to Rick9Plus
quote:
My home was bought through a private sale where a family member bought it outright and then mortgaged it to me, and I pay them directly.
Id put good money on some nefarious tax activity with this arrangement
Posted on 9/2/22 at 2:18 pm to Rick9Plus
I would get an auto loan quote from some where independently before going to the dealership. Try your local bank or anywhere with the best rate. You have that preapproval in hand before going to dealership. Don't tell them that though until you get to financing part. Then when they give you their rate, if it is better take it. If not then show them your rate and say beat it or I am using this bank.
Nerd Wallet
Nerd Wallet
Posted on 9/2/22 at 2:21 pm to Mingo Was His NameO
quote:
Id put good money on some nefarious tax activity with this arrangement
You’d lose. It was done in part due to my heavy debt at the time of the sale. I didn’t qualify for a mortgage and they had the funds. There’s a legal mortgage through a title attorney. Everything is reported to the IRS in the proper way every year. ETA the interest rate is the average rate for the month and year that the sale was made.
This post was edited on 9/2/22 at 2:23 pm
Posted on 9/2/22 at 2:31 pm to Rick9Plus
quote:Genuinely confused as to why some of the folks here would tell you to even consider getting this loan. Pay cash and be done with it.
6.8%
Posted on 9/2/22 at 2:33 pm to Rick9Plus
I paid cash for my last few cars, new and used, and when I went to get a boat loan they wouldn't give it to me because I didn't have any installment loans. It wasn't just one lender, it was all of them. They didn't care I had 3 paid off cars and a paid for house. A couple suggested taking out a home loan but I wasn't about to put a mortgage on my house for a boat. I had to write a check for the boat. I will probably finance a car if I ever get another new one, or I might just buy a bike and finance that. You can get the 3 year YES loans from Yamaha.
I have been incredibly satisfied with the 10 year old car bracket for the past few years. If you find something that was taken care of its not much different than driving a new car, actually I have found while technology has increased materials have decreased in quality.
I have been incredibly satisfied with the 10 year old car bracket for the past few years. If you find something that was taken care of its not much different than driving a new car, actually I have found while technology has increased materials have decreased in quality.
Posted on 9/2/22 at 3:30 pm to armsdealer
quote:
I paid cash for my last few cars, new and used, and when I went to get a boat loan they wouldn't give it to me because I didn't have any installment loans.
This is the kind of thing that worries me. I’ve read that your credit takes a hit if you pay off a loan early, too. I’m wondering if anyone knows the various ins and outs of the sorcery they use to do your credit score. I’m wondering if I should pay cash for all but $5000 or something, and have it on autopay for the next 6 years just to keep my score up.
Posted on 9/2/22 at 3:33 pm to Rick9Plus
Don’t do it bruh just finance everything like everybody else
If you can pay cash that means you’re not getting enough car. Get a lambo or ford raptor
Things will collapse before they’ll come back at you for the debt
If you can pay cash that means you’re not getting enough car. Get a lambo or ford raptor
Things will collapse before they’ll come back at you for the debt
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