Quote:
Originally Posted by JoeD
Paying cash makes sense...if you can't manage your money.
I don't think it makes much sense to tie up a liquid $40K when you can get a much higher rate of return properly invested/traded than what you pay on a car-loan. Of course, I do that for a living so others might not have the means and know-how to make money in the markets daily, but I can guarantee you almost all broad-based ETFs and non-speculative US equities will rise significantly more than 5-6% within the next year, roughly the APR one would pay on a car-loan.
With every car I've financed, however, I've put down 50% rounded up to a nice, whole number. That is of course if there isn't a good promotional lease-offer from the manufacturer, as depending on the circumstances, leasing is the best way to go...
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I paid cash for mine. I don't necessarily think its a bad thing. If what you're saying is that investments will
likely rise
5 - 6% and if thats equal to a good APR, then paying cash for the car is sounder because its a guaranteed avoidance of the 5 - 6 % interest expense whereas with the equity investments, you'll gain 5 - 6% only if things turn out as planned, there's always some downside risk, even if its minimal. If you pay cash for a car, you should have enough reserve cash for investing anyhow.