Paying cars cash vs financing

[nakedfrog]

What's scary is that a bank looks at your income and credit rating and decides based on that if you can afford the payments. They don't consider all the other bills that come out. I'm sure I could get approved for a 50k vehicle if I really wanted to, but I doubt I could make the payments. I often look at the trucks and think "it would be nice", but when I really think deeper about it, I just can't justify it.

I think they also look at your current debt to income ratio...

 

[Red Squirrel]

I think they also look at your current debt to income ratio...

Yeah in my case I would pass with flying colors, as the only debt is house. Basically they will allow up to a certain amount of debt vs your income, then other factors like credit score etc. At least that's how I think it works, there may be other factors too.

 

[Fritzo]

Ahhh I see, so instead of properly educating someone (like yourselves), allow them to remain stupid/oblivious and just try to get them in the habit of not being QUITE as stupid. Makes sense.

His system is designed to put people in a mindset where they're afraid of debt. If they follow the program, I think they'll be OK.

 

[monkeydelmagico]

When interest rates are high I pay cash. When they are low enough that my money could earn a higher rate of return elsewhere I finance. Either way, I know I can afford it because the money to buy it outright is already in the bank.