Purchasing with Cash or Financing

[Chad86]

What are the pros and cons? I could pay cash but plan to buy a house soon. I figured with a bigger down payment I will be better off and then I can just pay off the car down the line with my mortgage.

Thoughts? Thanks!

[mav1178]

You should speak with a financial adviser.

-alex

[uEih]

The pros and cons depends on what you do with the money when you finance, how much the interest is, etc. So I don't think someone online can really tell you that since we really don't know what you do with your money.

[vroom4]

At 2% rate, my money is better off in the market.

[juliog]

If you can afford to do cash, you're not buying the most expensive car you can afford. Step up to an M4 or a Porsche!

/First world problems

[Jyn]

I had enough to pay cash, but did 66% down payment, financed the remaining 33% thru my bank and had it auto withdraw from an account with the money already set aside. Builds credit history and is basically paid off. Also made sure I had a no early payment fee so I could just finish off the payments after 12-18 months instead of the 3 year plan.

[extrashaky]

I got a 1.45% loan at my credit union. With an interest rate that low, it didn't make any sense not to finance. I kept my cash for other projects, and now I'm able to rebuild my Jeep for the places the BRZ can't go.

[Braces]

Place most of your money into the down payment on the house. the house is an appreciating asset. your money will grow with the rising equity in your house and your interest on your mortgage is tax deductible. the car is a depreciating asset. get a good low interest loan under 2%. Penfed.org is a good place to get a loan.

[extrashaky]

Originally Posted by Braces

Place most of your money into the down payment on the house. the house is an appreciating asset. your money will grow with the rising equity in your house and your interest on your mortgage is tax deductible. the car is a depreciating asset.

This.

Not to mention that mortgage rates are still pretty low, so it's still a good time to lock in a low rate and pay it off with less valuable money later. If paying cash for the car now delays the purchase of a home, you will likely pay a higher mortgage interest rate when you finally do buy one.

[vroom4]

Put down 5% or whatever the minimum is, wait for the market to flatten out, pull some cash out and pay to whatever you feel comfortable with.


Ahh it sounds so easy in theory.

[juliog]

Originally Posted by Braces

the house is an appreciating asset.

That's debatable..

[Model Citizen]

Originally Posted by juliog

That's debatable..

Long term real-estate is generally considered a safe investment.

Buying at the top of the bubble with an adjustable rate mortgage is not a safe investment.

Things have been on their way back up. Couple years ago I got the place i'm in now for about the price of a nice car thanks to the crash. It will eventually clear at least 100k profit.

[cycleboy]

See Post #2

/thread

My own personal philosophy though as far as cars is to finance as little as possible and pay the loan down as fast as possible. The bank makes money and you lose money the more you finance and the slower you pay it off.

On the house, put enough down to get affordable payments and a low rate, avoid anything adjustable if possible (I didn't but was able to refi).

Real estate recently has been iffy as far as appreciating, but as long as you get into a loan you can afford for the long haul, history says it will eventually gain value. (We were underwater for several years, but affording things fine, now probably close to even.)

[Shark]

Another thing to consider... the sooner you pay down 20% on your mortgage the sooner you don't have to pay mortgage insurance.