Auto loan or pay in cash?

bugmenot · #1 (**permalink**) 07-29-2010, 02:07 PM

My wife and I are both 24. We just got married in May. I'm in the situation of needing a car. Wanting to buy 1-2yr old car, used, from original owner. I've found plenty that suit my criteria in the $15-18k range.

Here's the financials: We have $8k saved up in a savings account and $40k in a Vanguard account given to us by her parents. Our combined income is about $90k/yr. Right now we're saving about $1k monthly and using the rest to pay off student loans.

She has excellent credit as her parents got her a credit card when she started college that they paid and we continue to pay. I have good credit too, probably not as great as hers since I've made a few late payments once or twice over the past 6 years. No defaults, collection agency problems, etc. though.

Should we just pay in cash? Or would it be advisable for us to cosign on an auto loan? If so, should we do the full amount or use a down payment and finance the rest?

We don't have a preference, we just want to do what's best in our situation.

Thanks!

DavidBibby · #2 (**permalink**) 07-29-2010, 06:14 PM

You have many options available to you.. Here are just some of them:

1) You and your wife enter a bank with a picture of the car you want. Let them know you intend to pay 7k on the car upfront and you need them to finance the rest. Regardless of whatever payment they set you at, you'll pay 1k/month towards it and pay it off as fast as possible. By only putting 7k down, you'll still have $1000 in savings for emergencies.

2) Buy a 7k (or cheaper) car today . This gets you a car now.. and start saving up another 1k per month until to have enough to money to combine with the SALE of your 7k car, to buy an 18k car CASH.

3) Hold off on buying anything until you have 15k, and offer that to the person selling it for 18k. Maybe CASH will talk him down.

Thoughts anyone else?

altheloanguy · #3 (**permalink**) 08-04-2010, 07:01 PM

I would pay a big down payment. Then finance the rest. Then open a credit card that gives your interest free for a year or so (those promotional ones). Then try to make payments as high as you can during that year. By the end of the year find another interest free credit card to do a balance transfer. And if you can't find one, the you pay off your car.

I know it sounds crazy but it works. I have tried that with all sort of loans.

stuart45 · #4 (**permalink**) 08-17-2010, 01:56 AM

pay full cash would be your best bet...

lighthouse · #5 (**permalink**) 08-17-2010, 03:50 PM

keep it simple...Pay Cash

saramartin · #6 (**permalink**) 08-18-2010, 05:38 AM

Quote:

Originally Posted by bugmenot

My wife and I are both 24. We just got married in May. I'm in the situation of needing a car. Wanting to buy 1-2yr old car, used, from original owner. I've found plenty that suit my criteria in the $15-18k range.

Here's the financials: We have $8k saved up in a savings account and $40k in a Vanguard account given to us by her parents. Our combined income is about $90k/yr. Right now we're saving about $1k monthly and using the rest to pay off student loans.

She has excellent credit as her parents got her a credit card when she started college that they paid and we continue to pay. I have good credit too, probably not as great as hers since I've made a few late payments once or twice over the past 6 years. No defaults, collection agency problems, etc. though.

Should we just pay in cash? Or would it be advisable for us to cosign on an auto loan? If so, should we do the full amount or use a down payment and finance the rest?

We don't have a preference, we just want to do what's best in our situation.

Thanks!

If you have the money to pay it off, just pay it off and be done with it, it’ll definitely be good for your credit if you can show that you pay your debts.Right now there’s lots of cars going for cheap as 60% of population can’t pay for it!

alfredjony · #7 (**permalink**) 09-05-2010, 03:59 AM

hey if you just save your money and your savings just remains idle, you should go to utilize your savings.
but if you are planning to invest some money in some biz, then you should go for taking loan because idle money is better than credit money

coolJune · #8 (**permalink**) 01-07-2011, 04:34 AM

Most preferably, if you are having a finances crisis and you want to get for a car go for the auto loan but much better to pay full cash so you will not wondering about your loan.

dalemdunn · #9 (**permalink**) 03-17-2011, 11:29 AM

Pay the car in cash. Best if you can pay in cash, do it straight away. It is the most practical and reasonable thing to do.

RichS · #10 (**permalink**) 03-17-2011, 12:21 PM

Why add any new debt to your situation? You can't deduct the interest you pay on a car loan. A car is necessary but a money pit and depreciates as soon as your drive it off the car lot. If you can pay cash then do that. You may want to consider looking for a less expensive car. Just some basic transportation for now. Be practical and don't try to impress anyone other then yourself.
You just got married and reliable transportation is all you need for now. Remember kids have a way of showing up when they are least expected and when we can least afford to have them. Do what's best for your family.

Richs CFP(r)
www.insimplelanguage.com

littleroc02us · #11 (**permalink**) 03-31-2011, 05:51 PM

who are you cosigning a loan for?

loans123 · #12 (**permalink**) 04-01-2011, 07:02 AM

With the current economic downturn, it has become harder and harder for the average customer to get a loan. In fact, most banks require that you have a high credit score and/or some form of collateral now, and in some cases, they aren't even lending! Under these circumstances, even though you need the money, you feel discouraged from even applying for a Payday Advance or Bad Credit Loan.

ralphegermain · #13 (**permalink**) 04-05-2011, 01:09 PM

Economy has not gone better for all of us. We are still hoping for the better however, so never lose hope. We just need to learn to spend wiser. If you are having issues with your car expenses, just let it go.

khosta · #14 (**permalink**) 04-06-2011, 11:37 AM

I would pay it in cash and get it over with!! You don't want to any debt or any extra payments to your already good situation!! Debt and loans are the worst and haunt you forever!!!

homasharrhy · #15 (**permalink**) 04-20-2011, 02:03 AM

I want to pay a large deposit. Then cover the rest. Then open a credit card that gives its zero interest rate for a year or so. Then try also to make payments as high as possible during the year. End of the year to find another credit card to make interest-free balance transfer. And if you can not find one, you pay the car.

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