Any reason not to pay cash?

[Zargon]

at 1% it seems silly to pay cash especially with a kid on the way


I waited to pay my truck off till after my boy showed up healthy and happy and we had an actualy bill from hospital in hand

you could always pay for some of it down, to get the payment at a # you want to see

I agree with the masses here. If the interest rate is low enough, buy on a loan. Some life emergencies don't come with low interest loans, and having 30k liquid can easily knock out most of what comes at you.

Granted, if you have a new car, you probably won't have to worry about that much. But water heaters, air conditioners, delivery, etc. etc. etc.

Also, should you decide that enough is enough, and you're tired of paying the loan, you have the cash to wipe it out. Honestly, it makes sense, at least to me, to start it off as a loan and wait some things out and see where you're at after junior comes along. If everything goes well, knock out the loan.

yup.

its the same reason people are extending mortgages at this rate that pay off the house

no one will loan you 200K in a hurry at 2.875%, refi's and re-mortgages take a month ATLEAST.

 

[ponyo]

In the US, it's not typically a wise idea to pay cash for anything around 10k USD or more. You have to fill out extra paperwork to basically prove that the money was taxed and lawfully earned. It's funny, but I wrote a personal check for the Corvette and they let me drive it off the lot without hesitation. It's tougher to buy a pizza or get groceries with a personal check.

Thanks for the advice everyone. This would not wipe out savings, but with current loan rates through my credit union, it just seem silly to tie actual liquid assets into a vehicle.

$10k rule only applies to actual cash. It doesn't matter if you pay with check or via money transfer. Despite what you might have read, new car dealers prefer not dealing with US cash. They have to count it, store it, and deposit it. Banks charge the dealership fees for depositing that cash. Generally, actual cash is a hassle for the dealership and they much prefer you pay in full with a check or wire transfer.

 

[ss284]

1% is a free loan. If you can control your own spending you'll be better of financing.

 

[LTC8K6]

http://en.wikipedia.org/wiki/Currency_transaction_report

http://en.wikipedia.org/wiki/Suspicious_activity_report

 

[Baked]

Damn, if the dealer offers me 1% interest for at least 24 months, I would go out and buy a BRZ Limited right now. Then I'll have 2 cars! Sweet.

 

[KentState]

$10k rule only applies to actual cash. It doesn't matter if you pay with check or via money transfer. Despite what you might have read, new car dealers prefer not dealing with US cash. They have to count it, store it, and deposit it. Banks charge the dealership fees for depositing that cash. Generally, actual cash is a hassle for the dealership and they much prefer you pay in full with a check or wire transfer.

I was replying to the post about getting robbed if you took $10k in cash to buy a car. I was merely stating that doing so requires paperwork and is a hassle to begin with. I've written checks for a lot more to buy cars in the past which would be my intent this time around.

 

[Gillbot]

I bought a car cash last summer. The dealership said if I used a certified check, I would have to wait for it to clear. Apparently there are a lot of counterfeiters. A personal check on the other hand was no problem. I thought it was strange they would take such a large personal check.

Depends on the bank. Typically, if it's a known institution with a local branch they just call for either a certified or personal check to verify the funds are there.

When I got my Jeep, they offered 0% but I was prepared to pay cash and they had no issues with a personal or certified check. However, I negotiated based on cash/check price, then applied that price to their 0% financing offer. :biggrin:

 

[WilliamM2]

Depends on the bank. Typically, if it's a known institution with a local branch they just call for either a certified or personal check to verify the funds are there.

It was a Saturday at 4:30 pm. Bank wasn't even open. Bought my wife's car the same way at a different dealer a week later at 8:00 at night.

 

[Timorous]

1% is less than inflation, surely? If so then it's a no brainer to keep your cash on hand and take the finance because you come out ahead even if you stick your money in your mattress. There are probably other ways to use that money to get a better return than 1% to put you even further ahead by the end of the period.

Only reason to pay cash would be for a much better deal that works out better over 2 years or if you have a poor credit rating and cannot get the loan.

 

[Mandres]

The other question worth asking is whether it's really wise to buy a brand new vehicle with a child on the way? Why not a 2 year-old model with 30k on the odometer to avoid most of the depreciation hit?

Not like you have to impress the chicks ;-)

 

[NutBucket]

Assuming you don't do it all the time some people like the piece of mind that they know exactly how their vehicle has been care for since day 1.

 

[KentState]

The other question worth asking is whether it's really wise to buy a brand new vehicle with a child on the way? Why not a 2 year-old model with 30k on the odometer to avoid most of the depreciation hit?

Not like you have to impress the chicks ;-)

The car isn't for me, but the wife so it's not really about impressing anyone but getting her what she wants. We plan to keep this car for a very long time and want the latest safety features and conveniences that were introduced in the 2013 Accord. The Altima has last nearly 12 yearsj/170k so buying new is fine with me.

I should clarify that the savings was specifically for a new car. I started the savings for the car on January 1st of this year and due to various circumstances was quickly able to sock away the money.

 

[Vdubchaos]

These.

We were going to pay cash for my Camaro replacement but with 0% on the Jeep from the dealer, why burn up liquid assets when we get 0% financing? Now if something happens we have the cash to pay it off but using their money at 0%, we are further ahead by leaving our cash sit in savings generating interest for us.

You are forgetting about the little thing called inflation....

Given that you won't actually earn interest greater than the inflation rate out of a CD, there's no appreciable difference between the two choice except that one leaves you beholden to a lender for three years.

Ding ding ding

x2

 

[Gillbot]

You are forgetting about the little thing called inflation....



Ding ding ding

x2

Depends on what you are buying, and the yield you get out of your money. Personally, at 0% i'll keep my cash on hand and in the event I need to payoff the loan I can. Plus at 0%, any yield I get on my cash is putting me in the + side, so you'd be crazy not to use their money for free.

 

[Timorous]

You are forgetting about the little thing called inflation....

Inflation gives you an advantage on a 0% loan. If you have a 0% loan for 2 years on 30K you are paying 1,250 a month. The 1,250 you pay in the final month of the loan has less spending power than the first payment so you are in effect getting a discount on that 30K purchase.

Unless you need the peace of mind that paying cash can provide any loan that has a lower interest rate than inflation is in effect paying you to have the loan.