Comments on: Are there cons to buying a new car without taking out a loan?

By: fisherwoman

fisherwoman — Sat, 23 May 2009 16:33:59 +0000

The problem with buying brand new, is as soon as you hit the pavement, the car value dropped by thousands. I think it’s better to purchase a car that is a year or two old, the same model car has excellent resale value if you buy a Honda or Toyota. My preference is Honda, excellent car, with very high reliability standards. No credit check on a cash deal, be prepared to barter, though. I’d keep as much cash available as possible, the home purchase should be your goal.

By: theomdude

theomdude — Thu, 21 May 2009 02:01:44 +0000

1. The most compelling reason would be the ‘opportunity cost’ you would lose. This is the value that cash would accrue as an investment during the loan period. If the loan rate is less than the rate you could get on an investment, then you are better off getting a loan and investing the cash.

2. A dealer is required by law (in California, anyway) to fill out the ‘five line’ part of a loan application. It’s just basic information to identify you.

3. There is little advantage to getting a small loan over a big one unless the rate is higher than the rate you could get investing the money. The exception is if you are getting the loan to establish credit.

Paying cash doesn’t necessarily get you a better deal, either. That comes from doing your homework and shopping intelligently.

By: chrissandefur2003

chrissandefur2003 — Tue, 19 May 2009 16:14:37 +0000

No, great idea, that intrest really kills you. And if something happens where your late or miss a payment that can devastate your credit.
But thats the other thing, credit. If you have good credit and your confident that you can do the large down payment option then that will raise your credit rating higher. But if you have a low score then you will get stuck with a bad intrest rate and higher payments.

As for the credit check, they will only do that if you need to finance, hell you can even go in there with a check from another loan office and they have no reason to check your credit.

The special backround check would only be on your license. But if you pay more than, I think, 10 thousand they have to report it to a government angency, not sure which one.

By: DoYouKnowMe

DoYouKnowMe — Sun, 17 May 2009 02:40:47 +0000

i don’t like paying cash for big ticket items because you may need it for some emergency and you could collect some interest even if it is very little – i’m currently leasing because the last car i bought new was a disaster after the warranty ran out – i doubt if i will ever buy again – i will lease from here on out

By: redd headd

redd headd — Sat, 16 May 2009 00:15:57 +0000

There is some advantage to paying cash, But I would take a look at 0% financing that is short term. If it has a rebate take that first and pay cash The thing about buying a car and paying a loan is that your paying extra for purchase of a vehicle that is constantly depreciating. And I know the “well your paying with depreciating dollars.” I have paid cash for my last 3 new cars and it’s nice not having a loan payment every month, If you can.

By: Bill in Kansas

Bill in Kansas — Tue, 12 May 2009 19:19:02 +0000

It’s your money you can spend it any way you want to. There is never a credit check required when you buy something with cash. The only reason for a credit pull is to secure a loan.

By: bostonianinmo

bostonianinmo — Mon, 11 May 2009 22:00:08 +0000

I’ll answer your questions in the order posed:

1. If you can get a better return on an investment than the interest rate on the loan, take out the loan and invest the money you would have spent on the car.

2. Nope! You got money, you drive away.

3. That’s a possible option, especially if the investment option in #1 is not as predictable as you’d like. And you may be able to get a lower rate with a larger down payment, further leveraging your investment opportunity.

You make an extremely valid point about keeping enough on the side for emergencies. Just having enough in the bank or other liquid accounts to be able to say, “Take this job and shove it!” without worrying about the repercussions is TRUE FREEDOM! Factor that into your decision as well.

Buying Tip — from an old car salesman: Grind on price but let them THINK you’re going to finance it. They’ll take back whatever they give on price on the finance contract — it’s all money to them and they really don’t care where it is in the deal as long as they THINK it’s there. Sign the contract at the inflated loan rate. When you come in to take delivery, hand them a cashiers check for payment in full, or just wait until the first payment is due and pay it off all at once if you want to avoid the fireworks. They’ll be furious, but there’s NOTHING that they can do about it. This trick is especially profitable if they offer a cash incentive for financing through the manufacturer’s captive finance arm. I saved an extra $1,000 on the car I bought last year this way.

By: Rachael_T_98

Rachael_T_98 — Sun, 10 May 2009 08:01:11 +0000

You get a better price by paying cash in the first place. They don’t do a credit check. If you can put down a down payment that large, then just buy a cheaper car. I bought a brand new Kia Optima yesterday for $13,898. Of course it was the end of the month. And it really is a nice car.

By: Ben N

Ben N — Sat, 09 May 2009 08:55:46 +0000

If you would pay for the car without a loan that would be the best option for you. That way you would be paying the flat cost of the car and not have to worry about making monthly payments. You would save yourself a lot of money in the long run not having to pay interest on a loan also.

By: Bumbles

Bumbles — Wed, 06 May 2009 20:29:00 +0000

If you buy with cash then there is no credit check, it isnt needed. Going the loan route helps build credit. If your credit is fine then just buy the car in cash… no car payment to worry about, and you always get a cheaper price with a cash buyout…. no interest rate on the loan either.