Would you buy a brand new car in cash?
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How much do you keep in the bank vs brokerage?
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Yes. Everyone should buy a depreciable asset in cash because often you’re paying interest etc on value that’s long gone. I would recommend buying used though.
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Well, you also have to consider the short term capital gains and tax rate on it so your net is not 3% per C2 example above. Otherwise, I agree with C2.
Yes and I have each time I have bought a car. It gives you a reality check of what you can afford. No sense in my mind financing any depreciating asset. I don’t want a balance sheet with liabilities relating to monthly payments for things that don’t hold value.
Why would it be bad to pay cash?
I personally like new but that is because I keep my cars a long time and do not like dealing with extra maintenance.
Enthusiast
No to brand new car and no to all cash
Chief
Assuming you can get a 0% APR loan, no. You’d be better served investing your money and paying the loan monthly as usual.
Enthusiast
Even without the HYSA or any interest, OP would still come out ahead due to inflation. IOW, the 0% car loan is an inflation hedge.
Only if it was a miniscule fraction of my net worth
I've never bought a brand new car. The second you drive it off the lot, it's depreciated. You can (often) easily find a former fleet rental that won't instantly depreciate 20%.
Never buy a rental. A rental is more likely to have a rough start in life. Recommend a lease that was turned in.
Sometimes the economics make sense for a new car. Used car carries higher finance charges typically. New cars, while more “sticker price” more expensive, after factoring in finance charges may only be $1,000 or less more expensive. Amortize the 1k over the life of the car, may be worth it’ll buy new. Def do your own analysis because can vary greatly between car and your likelihood to buy a new car earlier.
New cars generally have very favorable interest rates. 0-3%, so I would never pay cash.
no way! 1% is nothing and I know what I can afford and I know how to invest. Can’t believe the number of yes’s
yes not everything needs to be a personal investment opportunity. if it makes you happy live a little
2020 I made a lot of money. Bought a Tesla Model Y all cash BUT I also added an extra $500k on my new home mortgage we did around the same time - 2.375% 30year fixed was hard to beat. Mentally figure my auto loan is just in the home mortgage.
Would normally recommend getting a super cheap loan and keeping what you can invested as that would more likely result in improving your net worth long term. Just make sure you’re good from a cash flow POV.
Your call if you want new vs used. Obvious depreciation differences but you don’t buy a car to build your net worth.
Pro
Yes, but don’t tell the dealership you’re paying in cash. Negotiate down the price of the car by getting financing through the dealership (the salesmen make more selling the financing than they do the car itself), then pay off the loan in the next couple months.
However, having done that successfully and also bought a lightly used car, I will probably look for a gently used vehicle first for my next car purchase. We got a great deal on a six-month old used car, and we have had great luck with it.
But car purchase is a mix of finance decision and personal joy. I think it’s okay to “waste” money on a depreciating asset and buying new if you understand the money you’re losing, but still just enjoy owning a brand new car. It’s one of the joys in life for many people, and that’s okay too.
You mean like a literal suitcase full of bills or writing a check. Yes to the check but I guess nothing wrong with cash. Maybe you always have that sitting around in case a family member is kidnapped. I have never leased or financed a car.
Yes. I know I could make more investing the $ and paying a low interest loan, but for peace of mind I strongly prefer not having a car payment.
Please send any extra cash to me - I never say no to free money 😉
Do you mean like a briefcase of cash or does this cover writing a check?
not with these low rates.
I’d never buy a brand new car because of how much value it immediately loses. I always buy 1-3 years old. It’s a depreciating asset no matter how you pay for it so my goal is to enjoy it but not sink a chunk of money into it.
Yes. Twice. The car was a new to me car (gently used) each time. Highly recommend paying cash for a reliable used car and driving it until it dies.
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Yes