Paying cars cash vs financing

[OILFIELDTRASH]

What's your thoughts on it? Do you buy used cars cash? New cars financed? New cars cash? Currently I finance new cars. Can't help but feel it's a huge waste of money. Listening to Dave Ramsey he absolutely hates financing vehicles. I don't really see myself having more than 12k to buy a cash car when the time comes. I'm not sure I trust a 12k car to be 100% reliable. What is your opinions and experiences?

 

[Ruptga]

2004-2006: 93 Taurus, 2k, blew a transmission seal then burned up the dry transmission. Other than that, no issues.
2006-2016: 98 Towncar, 3k, some expensive repairs but it never stranded me. Reliability and cost of maintenance were issues at the end.
2016-????: 07 Fit, 7k, no problems worth mentioning yet.

No, you do not need to spend 12k+ to have a reliable car. I've never had a car payment either, it's nice.

 

[ajskydiver]

If the interest you earn on your money is guaranteed to be higher than the rate on the loan, finance, otherwise don't.

ATOT answer - (you) must obviously have the cash and anyone who can't afford to pay for a car in full is a fool. Financing is for idiots who like to piss away money on depreciating assets.

Real world answer. It depends.

 

[Uppsala9496]

I've done both. Financed used and new and have paid cash used and new.
Most recently I paid cash for 2 cpo's. In hindsight, I maybe should have financed half the amount or something. I like having a large cash balance in the bank. I paid $65k cash for both cars.

 

[skull]

I've never paid more than 5k for a vehicle. I've had pretty good luck, had to put a motor in one 2k truck and a trans in another $400 truck but I did it myself. My best purchase was a junker 91 ford escort stored in a garage. Gave the guy $100 for it, got it running for $75 beat the piss out of it for 2 years with only one fairly major issue I fixed on the cheap. Sold it to my buddy for $500 he drove it for a year and sold it to his brother who blew the trans and scraped it after a year. That car was awesome it was so disgusting I had to rip out most of the interior except for the seats. The exhaust was broke at the exhaust manifold 4 cyl 5 speed was a blast to drive. It would tick every now and then so I'd bounce it off the rev limiter and it would quiet down for a few more weeks. I bought my sisters 06 saturn ion for 3k or I would of kept it. I kind of regret selling it, was funner to drive than my pretty saturn I don't want to tear up.

 

[nakedfrog]

I would absolutely trust a $12k car to be 100% reliable (well, 99%, I wouldn't trust any car to be 100% ever, because shit happens). I've never bought a car more expensive than that, and I've never bought new.

 

[NutBucket]

Sub 2% financing? Why pay cash?

 

[dullard]

I buy new cars with cash. But I buy reliable cars, at a low price, and hold them for 10 years.

Figure out whatever it takes for you to be able to buy your next car with cash (new or used). Then do that. Learning to budget money like that is a way more valuable skill than just the savings on the interest you'll have.

 

[Humpy]

I like driving new cars and will likely have a low interest car payment for eternity.

 

[Exterous]

Getting the last year of a specific generation of car with ~20k miles on them for around $16k has worked well for us. Bought a 2005 7th gen civic (2001-2005) and a 2011 8th gen civic (2006-2011) for around the same price. The idea being that a lot of design issues\bugs have been worked out by this time and that there is an established parts market already available for a large number of components. So far its worked out with the only repair on either vehicle >$400 being an AC compressor replacement. The 05 is starting to show its age though as I've had to replace several things on it this year (Speedometer, ac fan, just did the erg valve today) so we're starting to look at doing the same thing again - maybe with a step up to an accord or camry.

If it were me with $12k for a vehicle I would finance the remainder to get a civic with around 15k-20k miles on it. Personally, for my daily drivers I don't care for much beyond good gas mileage, reliability, cruise control and a radio.

 

[JulesMaximus]

Car loans are low-interest, short-term debt. I see no reason to pay cash for a car unless you have really bad credit (in which case you probably don't have any cash anyway) or you simply have so much cash you are having trouble keeping track of it all.

I typically put 15-20% down and finance the rest for 3-4 years max. CPO isn't a bad way to go if you can find a decent low mileage car.

Cars aren't an investment. They are consumable.

 

[highland145]

Bought a 1995 accord for the kid but I've been driving it until he gets his restricted. The car was well maintained and, so far, no problems after 3 tanks of gas. The new tacomas are $30K....eff that. New vehicles are ridiculously expensive. I have kept my new ones for long periods (19 years for the prelude, 7 for the current tacoma) so I'm not constantly losing $$ buy buying every few years. After driving the accord, I doubt that I will ever buy a new car again....

...unless the wife says so.

 

[highland145]

I typically put 15-20% down and finance the rest for 3-4 years max. CPO isn't a bad way to go if you can find a decent low mileage car.

Cars aren't an investment. They are consumable.

CPO?

 

[Exterous]

CPO?

Certified Pre Owned

 

[highland145]

Thanks

 

[IronWing]

I've always paid cash for both used and new. Mainly, it was just easier than dealing with financing.

 

[ponyo]

Drive your new car for 10+ years. With how reliable cars are now, driving it 20 years is not out of the question. Save $2,000 a year and after 10 years, you can buy $20,000 car with cash. I remember you selling your truck to buy new Fiesta or some small car because the gas price was too high. Then selling the Fiesta once the gas prices dropped and buying another brand new Ford pickup truck. I think you might even had like new Honda Civic too. If you change vehicles because of gas prices and every 2-3 years, you're never going to be able to pay cash for a car on a worker's salary.

 

[Squisher]

cash

 

[OILFIELDTRASH]

Drive your new car for 10+ years. With how reliable cars are now, driving it 20 years is not out of the question. Save $2,000 a year and after 10 years, you can buy $20,000 car with cash. I remember you selling your truck to buy new Fiesta or some small car because the gas price was too high. Then selling the Fiesta once the gas prices dropped and buying another brand new Ford pickup truck. I think you might even had like new Honda Civic too. If you change vehicles because of gas prices and every 2-3 years, you're never going to be able to pay cash for a car on a worker's salary.

I've changed cars mainly out of boredom. Either way it was a terrible financial decision. I'd prefer to get off the payment treadmill though. Focusing on paying off car loans and figuring out what the plan is down the road when it's time to replace current vehicles.

 

[Loop2kil]

I usually try to buy used but only a couple of years old max, finance it and pay it off as quickly as possible. Then drive the !@#K out of it until the wheels fall off.

Currently driving an '05 Scion tC that I bought with 12k miles on it in late '05. I Paid it off in 3 years (late '08) and I still drive it daily with ~202k miles on it. Only maintenance expense so far is about $800 for a new wheel seal, water pump and thermostat all at the same time (I think there was a couple of other small items in that price as well, can't really remember)

The low profile tires run me about $380 every 40k miles or so and it gets me about 30mi/gal, and I swear to god I'm only on my 2nd set of brake pads.

 

[child of wonder]

I drive a lot for work and get mileage reimbursed so I finance. The mileage money pays for the car payment and then some, so after 2-3 years I get something different. Can't afford to have an unreliable car.

 

[edro]

The interest on our last car loan was like $350 over 3 years... not that big of a deal.

 

[OutHouse]

when i bought my 2015 mazda, my Credit Union was offering .9% financing. that's pretty much a free loan in my book and took it. i felt better not draining my bank account 23K.

 

[RockinZ28]

Financed my first new car a couple months ago. Work gifted me a vehicle that I got $13k trade in value, rest was a 0% loan.

 

[pauldun170]

What's your thoughts on it? Do you buy used cars cash? New cars financed? New cars cash? Currently I finance new cars. Can't help but feel it's a huge waste of money. Listening to Dave Ramsey he absolutely hates financing vehicles. I don't really see myself having more than 12k to buy a cash car when the time comes. I'm not sure I trust a 12k car to be 100% reliable. What is your opinions and experiences?

Wife gets new Vehicles
I get used vehicles, where I set a cap and spend cash
My last 2 cars were purchased with 10K cap.
My current 2002 purchased in 2008 has needed nothing but normal consumables (pads, tires, fluids, battery). The paint is faded on the hood. Headlights are starting to cloud but runs great. Everything works.
In my experience, it all depends on what you are spending your 12K on.
12K on Camry or Corolla will get you an automotive appliance that will last for 10years+
12K on an Oddysey will get you something that will toss a transmission in 5 years
12K on a VW gets you laughed at when you complain the CEL won't shut off.
12K on an Altima gets you rattles and failing power steering pump.
etc etc