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New Car Finances

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by: Nicole4647 Active Indicator LED Icon 2 OP 
~ 7 years ago   Apr 27, '16 12:37pm  
My husband and myself are looking at purchasing new cars. I'm wondering though if it's better to put a lot of money down upfront and have a lower car note or if it's better to take the higher payment and keep the money in savings. The higher note only bothers us if someone were to lose their job however we would have the money in savings. Considering its no interest I'm leaning on keeping my money and putting it in an account that has interest. But my husband doesn't like seeing a car note that high. I'm under the impression though that the money will be spent either way. Or would it be better to pay cash for 1 car and fully finance the other with nothing down? Any advice? Thanks in advance. 4951
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engel989 Active Indicator LED Icon
~ 7 years ago   Apr 27, '16 12:48pm  
If you are capable of paying a higher price, put down the extra money and make the higher payment.  Get it paid off quick.  Or, wait till you have enough to just pay cash for the car. 4951
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BooBear Active Indicator LED Icon 16
~ 7 years ago   Apr 27, '16 12:51pm  
At 0% it makes sense to use their money. And pay it off as quick as you can. 4951
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PedroDePacas Active Indicator LED Icon 16
~ 7 years ago   Apr 27, '16 12:53pm  
Depends on your situation. Myself, I get my vehicles paid off as soon as possible if I even finance any of it. I usually trade them in about every 4-5 years. This last truck I was offered such a low interest rate on the balance, I decided to only put down half the difference between my trade in and the cost of the new truck. I then paid off the remaining balance within the first year. Holding onto the money vs paying the teeny tiny interest was beneficial in my favor but it wasn't anything worth bragging about. Total extra money in my pocket was maybe a tank of gas or two. 4951
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Ray Active Indicator LED Icon 17
~ 7 years ago   Apr 27, '16 12:58pm  
U can do a LOT of repairs to keep an older car running.SAVE your money till you have enough cash for new wheels and 6 months ins.Safe,sure,100% effective and remains yours regardless of employment.This is harder than the slide of shiney new paint....but far more financially prudent. 4951
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podunk Active Indicator LED Icon 8
~ 7 years ago   Apr 27, '16 1:05pm  
It's one of those individual situation/finances things. 0% is hard to pass up though. 4951
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tguid18 Active Indicator LED Icon
~ 7 years ago   Apr 27, '16 1:21pm  
If you can pay one in cash, that would be the way to go instead of putting 50% on each, at least you would have 1 title in your hand. 4951
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buffaloglenn Active Indicator LED Icon 11
~ 7 years ago   Apr 27, '16 1:29pm  
At 0% it makes sense to use their money. And pay it off as quick as you can.
 
@BooBear: 0% at the same sales price is essentially a no-brainer in my opinion.  Now, if it's 0%, sales price $30,000 vs. paying cash and sales price $27,000, you have to look at what you could make on investing the money over the same time.  It's likely you would do better if you took the 0% and invested the cash you had from the start. 
4951
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Stealth83 Active Indicator LED Icon 16
~ 7 years ago   Apr 27, '16 2:28pm  
Removed By Request 4951
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Spork Active Indicator LED Icon 9
~ 7 years ago   Apr 27, '16 3:40pm  
My husband and myself are looking at purchasing new cars. I'm wondering though if it's better to put a lot of money down upfront and have a lower car note or if it's better to take the higher payment and keep the money in savings. The higher note only bothers us if someone were to lose their job however we would have the money in savings. Considering its no interest I'm leaning on keeping my money and putting it in an account that has interest. But my husband doesn't like seeing a car note that high. I'm under the impression though that the money will be spent either way. Or would it be better to pay cash for 1 car and fully finance the other with nothing down? Any advice? Thanks in advance.
 
@Nicole4647:
 
0% interest often means they profit in other ways. Sometimes they have strictly enforced payment deadlines with high fees for failing to make the deadline. You may also see higher processing fees or various upfront fees. Stated another way, zero percent does not always mean no extra cost. Some dealers entice people with poor credit knowing they will fail to make a payment eventually. They can optimize this outcome by making the payment high enough to be difficult for you to make. They then repossess at the soonest opportunity when the agreement is not met so they can resell the car for profit yet again, having banked the money you already paid. Read the contract very closely.
 
My preference is to pay cash. Freedom from debt just feels less stressful. That's priceless. 4951
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Fallon Active Indicator LED Icon 18
~ 7 years ago   Apr 27, '16 10:59pm  
Removed By Request 4951
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uneasyrider Active Indicator LED Icon 3
~ 7 years ago   Apr 28, '16 8:30am  
@Stealth83, AMEN!!!Do not buy one new expensive car.  Buy 2 good used cars, for the price of the one you were going to pay cash for.  It may not be a Mercedes, but paid for is always better more attractive and oh so lovely sitting in your driveway!
 
@Fallon: Or at least consider the rate of depreciation which can be as high as 15-19 percent in the first year depending on the car. I always think in terms of how long I plan to drive it ( which is normally 10 years) and the cost of ownership. I do a lot of research so I can run from anything that loses value fast and costs a lot to maintain.
4951
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beastmode Active Indicator LED Icon 12
~ 7 years ago   Apr 28, '16 8:50am  
I suggest writing down where you feel comfortable...note, savings...etc.Use that as a foundation. From there, compare interest rates across the board on anything else...you have negative or positive. Then you will know your bullseye mark. Putting a lot down, yes your note is lower but, that money could be working harder for you say putting extra towards your home or other investments.That bullseye is different for everyone. A good example; Mark Zuckerberg could have paid off his first home no problem but, he was making more off the money, a lot more with FB. Made no sense to pay off the home. That sort of thing....for someone else, paying it off may be better. Depends. 4951
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ForeCPA90 Active Indicator LED Icon 9
~ 7 years ago   Apr 28, '16 8:53am  
I don't think there are any hard and fast rules, cars mean different things to different people.  I think an enthusiast could justify spending more money on a car than someone who views it as basic transportation.  My car is 12 years old, and I have not had a car note in 9 years. My wife and I needed a second car, so I bought one for $4k cash, and it was a great car.  I would rather finance a car at even a moderate rate than not have a cash emergency fund though, I really think people underestimate how important that is.  4951
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BooBear Active Indicator LED Icon 16
~ 7 years ago   Apr 28, '16 9:06am  
Make the decision based on worst case scenario..we have never depended on 2 incomes 4951
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beastmode Active Indicator LED Icon 12
~ 7 years ago   Apr 28, '16 9:07am  
I agree. My car is 12 years old. I did the math and it was way cheaper putting a new engine in it. The engine I got was one of the last ones that was brand spanking new. I'll drive it another 12 years, do not care. To most people that would seem insane. Spending 7K on a new engine but big picture it makes complete sense to me. My wife. No way. She wants a new car. Does not want to be in something that old, I'm fine with that so her car will be new. She works hard so if that's what makes her happy she should get it.  4951
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