Hi all,

Wanted to get opinions on buying a new car with cash vs finance.

We have about 20months of rainy day funds available AFTER paying for the car entirely with cash. Given the current market we're planning on holding on to cash instead of investing. With these factors is it reasonable to make a cash purchase?

Thanks in advance.

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IceCreamforLunch t1_jeg0nqs wrote on March 31, 2023 at 7:10 PM

If the cash is just going to sit there collecting dust you might as well pay cash for the car and avoid the auto loan interest.

vvreditt OP t1_jeg10ix wrote on March 31, 2023 at 7:12 PM

That was our reasoning as well - that amount is just collecting dust (other than savings account interests of 3.5%)

Taco_Fries t1_jeg27r6 wrote on March 31, 2023 at 7:20 PM

If you don't need the credit boost from the loan, I'd go for it. It's losing money if it's not sitting in a high-yield savings anyway.

vvreditt OP t1_jeg2iel wrote on March 31, 2023 at 7:22 PM

It is in a high yield savings getting ~3.5%. Credit scores are already exceptional (Fico) so not much need for boost in credit score.

BourbonGamer t1_jeg7k6d wrote on March 31, 2023 at 7:56 PM

What rate can you get now for your new vehicle. We just got Hyundais 0% rate. If you can’t get 0% for the particular vehicle you’re looking for Id imagine cash is the play.

vvreditt OP t1_jeg9mr0 wrote on March 31, 2023 at 8:10 PM

Rate is above 5%. So not really worth it.

BourbonGamer t1_jegs17h wrote on March 31, 2023 at 10:17 PM

I agree, definitely not.

Scary-Celebration-98 t1_jeg6vru wrote on March 31, 2023 at 7:51 PM

They’re predicting a recession towards the end of this year. If you’re in no rush, might as well wait for 0% deals to arrive

vvreditt OP t1_jeg9knx wrote on March 31, 2023 at 8:09 PM

Unfortunately can't wait that long :(

Scary-Celebration-98 t1_jegaaue wrote on March 31, 2023 at 8:14 PM

Workout a few deals with dealers and see what works best for you. Dealers are interested in financing because they get incentives from financing. But they maybe open to a cash offer

ThagAnderson t1_jeg4wth wrote on March 31, 2023 at 7:38 PM

You can very often get a better deal by financing, then just wait a month and pay the whole thing off. That being said, purchasing a new vehicle is a bad financial decision regardless of how you pay for it. Always better to find something reliable and used.

vvreditt OP t1_jeg9t2v wrote on March 31, 2023 at 8:11 PM

We are interested only in new car. But not much of a deal by financing either.