Does it make sense to buy a car outright or put half down and finance the rest with todays rates rather low.?

Question

I figure I could get a money market paying near what my loan amount would be so i can just invest the rest in there.

Answer 1

There are only two reasons to have a car loan:

1) You don't have the cash and couldn't buy a car any other way.

2) You have the cash but you have better uses for your money (investments, savings for future emergencies, pay down high interest credit cards, other important purchases)

Answer 2

I would go with however is giving you the best rate. If you can get a better interest rate on a loan from somewhere other then the dealership, then do that. But I think the generally, dealerships have better interest rates. Mine is like 2.5% interest.

But, if you have money to pay off the car completely without using loans, then do that. You might also be able to save more money because they might cut you a deal since you'll be paying cash.

Answer 3

I like the idea of paying for it, that way you do not have a lien on the title. If you want to sell it, you don't need the hassle of getting the lien off the title.

The interest that you pay is not tax deductible, while the interest you earn on the money is taxed as normal income. Figure the tax amounts in while you try and make a decision. That will lower your APY on the money. good luck.

Answer 4

It's alway a good idea to pay cash for your car.

Answer 5

IF UNDER 10K THEN I SAY YES.........BUT ANYTHING OVER THAT WILL CAUSE THE IRS TO CHECK YOU OUT..........ITS THE LAW.....THEY HAVE TO TRUN IT IN TO THE IRS.........