Buying a car with cash

[Bigtime]

My wife had saved up a bunch of money over the years, and a year after we got married she was finally done with her old Tiberon (it was on its last legs) and bought a new Yaris COLD CASH.

I married the 1%.

[stang]

I bought a used Yukon with cash once. $20,000 felt good not having a payment

[puckluck2]

I've always bought my cars cash, but my cars have never been anything special and always under $7,000. I'd never finance a car. If I can't afford what I want, I'll settle for what I can afford.

I'm not saying financing is wrong but I've always been of the mindset of don't buy what you can't afford.

[cKy]

Originally Posted by Iginla

I've always bought my cars cash, but my cars have never been anything special and always under $7,000. I'd never finance a car. If I can't afford what I want, I'll settle for what I can afford.

I'm not saying financing is wrong but I've always been of the mindset of don't buy what you can't afford.

I can afford my new car via monthly payments. Are you saying i should go car less for a year or two so i can just pay it outright?

[puckluck2]

Originally Posted by cKy

I can afford my new car via monthly payments. Are you saying i should go car less for a year or two so i can just pay it outright?

No, I am not saying you should do anything. It's your life, live it the way you want. Spend your money the way you want.

I was commenting on the way I choose to spend my money.

I do not finance because even though I could afford the payments I would rather not have monthly payments on a car that depreciates pretty fast and invest my extra money into buying rental properties.

A brand new car that loses $10,000 plus in its first couple years is not something I look forward to. But if someone has enough money to make that choice, and not have it effect them greatly then good for them. For me, like I said I'd rather invest that somewhere else.

[Rathji]

It's funny you say that because if you invest your money, it is often better to finance something rather than pay cash.

[Julio]

I have bought my last two cars with cash from the dealer...well I got a small loan outside of the dealer for the first one, but then with the latest one I put some down on the Visa then payed the rest outright...then payed off the visa right away so no finance charges. It feels nice to be able to do that and know that you own it outright.

[opendoor]

Originally Posted by Rathji

It's funny you say that because if you invest your money, it is often better to finance something rather than pay cash.

But it sounds like he's financing his investments (unless he's paying cash for rental properties as well) which has distinct tax advantages over financing a consumer product.

[VO #23]

Originally Posted by Iginla

No, I am not saying you should do anything. It's your life, live it the way you want. Spend your money the way you want.

I was commenting on the way I choose to spend my money.

I do not finance because even though I could afford the payments I would rather not have monthly payments on a car that depreciates pretty fast and invest my extra money into buying rental properties.

A brand new car that loses $10,000 plus in its first couple years is not something I look forward to. But if someone has enough money to make that choice, and not have it effect them greatly then good for them. For me, like I said I'd rather invest that somewhere else.

There's a lot of money in Subway franchises these days, isn't there?

[puckluck2]

Originally Posted by Rathji

It's funny you say that because if you invest your money, it is often better to finance something rather than pay cash.

Exactly, which is why I chose to get a mortgage for rental properties instead of a loan for a newer vehicle.

I can't afford to do both, does it make sense now?

[puckluck2]

Originally Posted by VO #23

There's a lot of money in Subway franchises these days, isn't there?

What?

[Dion]

Originally Posted by VO #23

There's a lot of money in Subway franchises these days, isn't there?

Is that you Champion???

[Wormius]

Originally Posted by kunkstyle

FATA!

http://forum.calgarypuck.com/showthread.php?t=110528

Funny, I always thought he was permanently banned, but I guess not.

Anyway, I agree with the sentiment about getting the best bang for your buck. If financing rates are low, go that route; if you can deduct lease paymens from your taxes, you can go that way. Personally, I don't think it would feel particularly great to drain $20+k out of your bank account in one fell-swoop just so you don't have monthly payments. Buy a $20k worth of GIC and you're better off than paying for a car outright if the financing rate is good.

[calgaryrocks]

I agree, if the rate is less then 2%, you could put that money in a tfsa at pc financial (For example) and earn 2% anyways. if you can get 0% you would be dumb to pay cash (financially speaking). financing also improves your credit rating (although if you qualify for 0%, you are doing ok in that sense)

[Rathji]

Originally Posted by Iginla

Exactly, which is why I chose to get a mortgage for rental properties instead of a loan for a newer vehicle.

I can't afford to do both, does it make sense now?

If you can get car financing for 0%-2%, then it would make sense to put that money onto a mortgage instead of a car, because there is almost no chance your mortgage rate is less than that. For example, borrow at 2% to avoid paying at 3-4%.

Maybe I am just being an idiot here, and people are able to get mortgages for a lot less than I am aware of.

[blankall]

Originally Posted by Rathji

If you can get car financing for 0%-2%, then it would make sense to put that money onto a mortgage instead of a car, because there is almost no chance your mortgage rate is less than that. For example, borrow at 2% to avoid paying at 3-4%.

Maybe I am just being an idiot here, and people are able to get mortgages for a lot less than I am aware of.

My mortgage is at 2.1%. I'm at prime -.9% on a variable rate. I have never heard of anyone getting a mortgage for <2%.

As for the buying new vs. used thing, I think the only time a person should go new is on a lease that can be written off for work. The depreciation on anything more than an entry level car, really is not worth it.

[Bill Bumface]

Originally Posted by Zethrynn

so if everyone got smart and only bought used, where would all the used cars come from? (seeming it is wrong to buy new)

The price of used cars would go up so much that it would approach that of new cars, and some people would start opting for new instead.

Oh Market Economy, you never cease to amaze me!

[Sliver]

Originally Posted by Wormius

Funny, I always thought he was permanently banned, but I guess not.

Anyway, I agree with the sentiment about getting the best bang for your buck. If financing rates are low, go that route; if you can deduct lease paymens from your taxes, you can go that way. Personally, I don't think it would feel particularly great to drain $20+k out of your bank account in one fell-swoop just so you don't have monthly payments. Buy a $20k worth of GIC and you're better off than paying for a car outright if the financing rate is good.

That seems back-asswards. Saving up to buy something actually feels good. Buying something on credit feels crappy to me.

[Wormius]

Originally Posted by Sliver

That seems back-asswards. Saving up to buy something actually feels good. Buying something on credit feels crappy to me.

You get the same satisfaction when you're done paying for it too. I was quite happy once my car, that I financed, was paid off and I no longer had monthly payment commitments. Ditto for the student loan. For us, it was good. The extra money at the time went towards our mortgage down payment so we could put 25% down. I think in the long run that was the better choice for us when mortgage rates were nearly 5% and our car was only 2%.

It totally depends on the situation. If the finance rates of vehicles was up there with credit card rates, then we would have considered used cars or paying for the car out right.

[You Need a Thneed]

You can definitely get a car cheaper paying cash than you can financing. In total dollars paid, it will always be cheaper to buy cash then even to pay 0% financing. Whether it's better to finance or pay cash obviously has more factors involved, as other have mentioned.