Pay cash for new car

[Northwestie]

Yea - I know.  I've never purchased a new car and have always found used ones.  My current '98 with 210k mi has reached that cost/benefit threshold with repairs.  Looking at a smaller all wheel drive - I use this a lot in snow/moderate clearance roads for backcountry skiing, climbing, hiking.

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets. 

[KBecks]

We were very pleased to buy an almost new car with cash.  Like you the cost of the car was a small % of NW.   

[Slee_stack]

I've mentioned on other threads that, presuming good credit, you can get an incredibly cheap third party auto loan for either a new, or used car.

I currently am 1 year into a 36mo third party used auto loan at 1.99% and no fees.

For 'new', it goes as low as 1.49%.

I'm risk tolerant enough to take my chances on my cash invested making more than 2% vs buying a car outright.

[Prairie Stash]

What's the interest rate on a car loan? Can you achieve greater returns investing the money? Do you have a mortgage, student loan or other debt that you could put the extra money against now?

Its irrelevant how much liquid cash you have; if it made a big dent or small dent the thought process is the same. Anytime you pay extra, more than you need, you essentially need to work longer. My goal is to pay as little interest/fees throughout my life and maximize savings. If you're paying the smallest amount reasonable to you in fees overall (not just your car) and maximizing your savings then that's your answer on cash/payments.

[Northwestie]

House is paid off, no student loans, no credit card debt.  No debt period.  Have maxed out tax-deferred investments for a decade or more.
Loan would be around 1.8%.

[Cranky]

We paid cash for a new car, and the salesman promptly reduced the price of the car.

[Giro]

I have the opposite experience with cash.  The finance companies throw in a few bucks to the dealerships to try and push their loans so it is BETTER for the dealership to have a car financed than paid for in cash.   I find out how much that is and ask for a little less than that amount after I negotiate the lowest price using internet comparisons. 

I would finance if it is less than 2% and invest the cash. 

[Slee_stack]

No person generally cares if they receive a stack of cash (which is actually usually just a bank or certified check) or a different type of bank check (third party loan).

Negotiate.  Get the best price.  Call it cash.  Then hand them your 1.8% third party loan check.

I don't understand why some are so scared of any kind of leveraging. It really is weak thinking.

Sure there is risk, that whatever you invest in will make less than ~2% loan rate (or even lose money).  But if someone is worrying about losing 2%, then how can that person ever take a chance investing in anything?  It is all a risk!

Be cold and logical and you will do just fine.  You borrow when the risk is tolerable and you don't when it isn't.  Leave the emotion out of it.

[EnjoyIt]

No person generally cares if they receive a stack of cash (which is actually usually just a bank or certified check) or a different type of bank check (third party loan).

Negotiate.  Get the best price.  Call it cash.  Then hand them your 1.8% third party loan check.

I don't understand why some are so scared of any kind of leveraging. It really is weak thinking.

Sure there is risk, that whatever you invest in will make less than ~2% loan rate (or even lose money).  But if someone is worrying about losing 2%, then how can that person ever take a chance investing in anything?  It is all a risk!

Be cold and logical and you will do just fine.  You borrow when the risk is tolerable and you don't when it isn't.  Leave the emotion out of it.

Do you think there is ever a point where arbitraging the interest rate vs potential market returns is just not worth it?  Can I offer you an example?

Lets assume we are talking about financing $20K over 3 years at 2% vs investing it getting 8%. 
The payment on a 3 year $20K 2% loan is $581.62/month
So I set up a spread sheet that went like this:

Month 1:
$20K invested at 8% gains interest of $133.33 for month 1.  Total is now $20,133.33
Interest that accrued on the car loan at 2% for that month is $33.33
The loan of $20K increases by $33.33 increasing it to $20,033.33
You now pull out the car payment of $581.62 from you investment fund which now totals $19,551.71

I repeated this process for all 36 months.  Arbitraging 6% will net you a little over $2000 profit over those 3 years. Now lets take into account that since the car is financed the loan company will demand a low deductible and higher damages than you would get on your own.  Car insurance prices vary so lets just guesstimate that the price difference is $200 extra a year which I think is not too unreasonable.  Now your profit margin is $1400 or $467 per year. 

I agree that $467 is still $467 but now here is the big question for you to decide if it is worth it.

What if you have $50K in investments is $467 a year worth it?  I would say maybe?
What if you have $100K in investments?
What if you have $500K?
What if you have a $1million?
What if you have $5 million?

As you can see at some point the $467/yr is just not worth it.

BTW, this is with a guaranteed 8% return.  That is a pretty hefty number to guarantee.  With a 6% return you are getting $1300 over 3 years minus costs or 700 over 3 years or $234/yr.  is that worth it?  To me I would rather be debt free than get an extra $234/yr.  Actually I would gladly pay $234 every year to guarantee myself being debt free, and to not have that extra fixed expense in my budget.

What if you did this exactly 2 years ago with 1 more year to go?  Well, If Vanguard Total Stock was your arbitraging investment of choice, you would be up $3.58% for both years and actually you are losing money on the deal thus far.

[Cranky]

And actually - I don't care if there is some way that borrowing money is better, because I prefer to be debt free. Not owing money (except for the cc that is paid off promptly) is better for *me* in every way.

[Northwestie]

Thanks for the details -- basically this is some of the reasons I'm leaning towards cash.  Hassel/benefit ratio factor

I must admit I've gotten flack here for a similar issue I have with chasing credit card offers - just not worth the pencil dust benefit factor for me.

[Fishindude]

Paying cash is absolutely the best way to purchase a new car, or anything else for that matter.
Let the other guys pay interest and tell you how they getting ahead by doing so.  Zero payments and zero debt is pretty solid financial strategy from my point of view.

 

[EnjoyIt]

Thanks for the details -- basically this is some of the reasons I'm leaning towards cash.  Hassel/benefit ratio factor

I must admit I've gotten flack here for a similar issue I have with chasing credit card offers - just not worth the pencil dust benefit factor for me.

You will laugh at me, Although I paid cash for the last 2 cars we bought, I do chase some credit card offers to amass enough miles to fly first class overseas.  My reasoning is that vacation time is limited and making sure I arrive to my location rested not needing that extra day to recuperate when flying home is worth something.  Flying first class buys me 2 days worth of time which is very valuable. Not so valuable that I am willing to pay cash for first class, but dancing around and collecting miles is somehow worth it.  Go figure.  I do not do the same thing for hotels.

[Cyaphas]

Assuming you don't play the bonuses off of credit cards:

I'd recommend figuring out the vehicle you want and the options you want. Get a letter together with those specifications and send it to every dealership of that make in a 100 mile radius. At the bottom, I'd state that you will be paying cash and you'll be buying from whichever dealership offers you the lowest price.

I've had a couple of friends do this and do very well. It's quick and you don't have to do a lot of foot work.

[ender]

The biggest reason I think paying cash is good is you are forcing yourself to pay up front for the purchase you are making, instead of "eh it's just a little bit more" and paying more.

As much as everyone here would never do this I expect that a large number of us would spend less if we never used credit of any sort on homes, cars, even monthly cards. How much less? Probably a factor of your individual willpower but naturally all of us will say we never spend a single penny more than if we paid with literal cash.

[Bajadoc]

For me, being debt free is more a philosophy of life than a financial decision. I don't want no stinking debt.

[MoneyCat]

I bought a new car with cash. One of the best decisions I have made. I have been driving it for years now with zero repairs for anything at all. As a Mustachian, you could probably make a new car bought for cash last 20 or 30 years. Well worth the price as far as I'm concerned.

[MustacheExplorer]

I paid cash for my last car purchase, a two year old used car.  The sales people and finance people at the car dealership were all over me until I drove off to finance the purchase through them.  To get their extra commission for selling the loan they made up all kinds of finance reasons why I should take the loan.  I just laughed.

[SyZ]

Depends on a ton of factors, but seems like you've made the decision to buy with cash

Personally, I don't feel a debt is really 'debt' if you have the cash. Meaning, if you have $50k in the bank and take out a $15k car loan, I don't really view that as debt. But the arguments have been made on financing versus investing and either option is worthwhile for $$ purposes or peace of mind

[Northwestie]

Thanks.  As always, some of this stuff seems to come down to a personal preference and not much money.  Going with the cash - will keep you posted on how the wrestling match goes.

[Forcus]

Cash price always being lower than financed price is not 100% correct. My experience is it depends on the dealer. I accidentally saw a kickback sheet before and the dealer could get $1k-$1.5k back if they got someone to take a loan from a particular bank (although this was some time ago, before dirt cheap interest rates, so may be less now). The interest rate pushed by the dealer also influenced the kickback.

[horsepoor]

Thanks.  As always, some of this stuff seems to come down to a personal preference and not much money.  Going with the cash - will keep you posted on how the wrestling match goes.

If you're willing to go lightly used, you're in a very good position to buy from a private party if you can find what you want.

[Slee_stack]

Almost every argument for paying cash is because of emotional reasons.  That's fine, but just recognize it as such.

For the vast majority of the human race, I highly discourage most loans. 

However, I expect a much more financially savvy audience with Mustachians.  Don't disregard loans just because they are the evil 'D' word.

Obviously some potential returns are not worth some people's effort and some risks won't fit one's tolerance. YMMV as it always does.


Cars are (or should be) a minor purchase relatively speaking.  But the same cold, logical assessment should be applied to mortgages.

If you would rather pay down a hypothetical mortgage at 3%, that's your call.  You are actually purchasing 'Peace of Mind' at the expense of potential investment returns.   Maybe 1 year out from FIRE will warrant a different strategy than 20 years out.  That's the point.  What works for you?  Don't limit your options 'just because'.

[mskyle]

You can't always get a discount for paying cash... a lot of dealers make more money on the financing than they do on the actual car. They may be willing to give you a discount on the car if you take the financing, and if you don't want to actually have a car loan just make sure there's no early-payoff penalty, take the financing, and then pay the loan off.

What works for you?  Don't limit your options 'just because'.

Exactly - don't worry about whether something makes sense *in the abstract*, look at whether it makes sense in this specific instance.

[Slee_stack]

No person generally cares if they receive a stack of cash (which is actually usually just a bank or certified check) or a different type of bank check (third party loan).

Negotiate.  Get the best price.  Call it cash.  Then hand them your 1.8% third party loan check.

I don't understand why some are so scared of any kind of leveraging. It really is weak thinking.

Sure there is risk, that whatever you invest in will make less than ~2% loan rate (or even lose money).  But if someone is worrying about losing 2%, then how can that person ever take a chance investing in anything?  It is all a risk!

Be cold and logical and you will do just fine.  You borrow when the risk is tolerable and you don't when it isn't.  Leave the emotion out of it.

Do you think there is ever a point where arbitraging the interest rate vs potential market returns is just not worth it?   Can I offer you an example?

Lets assume we are talking about financing $20K over 3 years at 2% vs investing it getting 8%. 
The payment on a 3 year $20K 2% loan is $581.62/month
So I set up a spread sheet that went like this:

Month 1:
$20K invested at 8% gains interest of $133.33 for month 1.  Total is now $20,133.33
Interest that accrued on the car loan at 2% for that month is $33.33
The loan of $20K increases by $33.33 increasing it to $20,033.33
You now pull out the car payment of $581.62 from you investment fund which now totals $19,551.71

I repeated this process for all 36 months.  Arbitraging 6% will net you a little over $2000 profit over those 3 years. Now lets take into account that since the car is financed the loan company will demand a low deductible and higher damages than you would get on your own.  Car insurance prices vary so lets just guesstimate that the price difference is $200 extra a year which I think is not too unreasonable.  Now your profit margin is $1400 or $467 per year. 

I agree that $467 is still $467 but now here is the big question for you to decide if it is worth it.

What if you have $50K in investments is $467 a year worth it?  I would say maybe?
What if you have $100K in investments?
What if you have $500K?
What if you have a $1million?
What if you have $5 million?

As you can see at some point the $467/yr is just not worth it.

BTW, this is with a guaranteed 8% return.  That is a pretty hefty number to guarantee.  With a 6% return you are getting $1300 over 3 years minus costs or 700 over 3 years or $234/yr.  is that worth it?  To me I would rather be debt free than get an extra $234/yr.  Actually I would gladly pay $234 every year to guarantee myself being debt free, and to not have that extra fixed expense in my budget.

What if you did this exactly 2 years ago with 1 more year to go?  Well, If Vanguard Total Stock was your arbitraging investment of choice, you would be up $3.58% for both years and actually you are losing money on the deal thus far.

I think almost everyone that follows this blog would say they'd rather have $1 more than less regardless of their net worth.

If the time involved is 'not worth it', that's of course OK.  The point is, assess and make your own decision.  Don't just see 'debt' and automatically presume 'evil'.

Paying extra insurance could be an added cost (but it also might not, check your loan originator, PenFed negotiates!).  Hopefully people assess all costs (and benefits) from whatever type of loan may be available.  For example, Whole Life Insurance generally pays a lower ROI, but there is also an additional benefit there (cash payout on death).  It is worth something above $0.  Likewise, there is a benefit to collision/comp too.  (OK, probably also low...but not $0)

All investments have risk, even the asset that is your paid off home.  Homes are not guaranteed to rise in value.  While morally questionable, there is no strategic default option or bank negotiation to ameliorate losses on a paid-for house.  Losses are locked in at that point.   No, I am not advocating this, but it is a cold financial truth.

Be open.  Be cold and logical.  Choose the best payment method.  Enjoy the best rate of wealth accumulation you can.  Peace.

[Chris22]

Ignoring interest paid/market gains, there's also something to be said for preserving liquidity.  Why tie up $10-20-30k of your own cash in a depreciating asset when you can tie up the bank's basically for free?  Put the money in an account with automatic withdrawls, and there is no "headache" associated with making payments on the car.

[Cycling Stache]

While morally questionable, there is no strategic default option or bank negotiation to ameliorate losses on a paid-for house.  Losses are locked in at that point.   No, I am not advocating this, but it is a cold financial truth.

This is true for people who don't have other assets.  People with lots of money (like most MMMers, or MMMers in the future) have liquid assets that a bank is going to be fine collecting.  A lawsuit for an unpaid mortgage is easy to file and easy to collect on.

You hear about strategic defaults because most people don't have money.  Don't be one of those people, and don't make decisions like them.

Also, in a homestead state, your paid-off house is immune from a forced sale (assuming you pay your property taxes). 

[Northwestie]

Thanks.  As always, some of this stuff seems to come down to a personal preference and not much money.  Going with the cash - will keep you posted on how the wrestling match goes.

If you're willing to go lightly used, you're in a very good position to buy from a private party if you can find what you want.

I have looked into this - problem is my first choice of Subaru - it's ridiculous how much folks want for a used one these days.  I picked up my last one with 25k miles on it - but out here it's either cars with 150k miles or ones with 20k miles but only $1500 cheaper than new, which is the reason I'm, reluctantly, going for new.    Seems the Subie crowd is hanging on to these things.

[ender]

You can't always get a discount for paying cash... a lot of dealers make more money on the financing than they do on the actual car. They may be willing to give you a discount on the car if you take the financing, and if you don't want to actually have a car loan just make sure there's no early-payoff penalty, take the financing, and then pay the loan off.

The way you win this game is you don't talk about financing until you agree on a price for the car. Or if you do, tell them that you aren't sure on your financing options, etc.

Alternatively bring a check made out to the dealership for a car you researched online (including fair but low pricing) and after the test drive/inspection tell them you are willing to sign the check and buy the car right there. If not, you are going to leave. I think this will be my next strategy.

[MoneyCat]

Thanks.  As always, some of this stuff seems to come down to a personal preference and not much money.  Going with the cash - will keep you posted on how the wrestling match goes.

If you're willing to go lightly used, you're in a very good position to buy from a private party if you can find what you want.

I have looked into this - problem is my first choice of Subaru - it's ridiculous how much folks want for a used one these days.  I picked up my last one with 25k miles on it - but out here it's either cars with 150k miles or ones with 20k miles but only $1500 cheaper than new, which is the reason I'm, reluctantly, going for new.    Seems the Subie crowd is hanging on to these things.

My first really good car was a 1990 Subaru Legacy sedan that was gifted to me. The thing was goddam bulletproof. It was rode hard and put away wet when I got it with about 150,000 miles on it and I put another 50,000 miles on it. Absolutely no problem. Didn't get great gas mileage, but reliable as all hell. That's why people sell them used for such a high price.

[MrMathMustache]

We paid cash for a new car, and the salesman promptly reduced the price of the car.

That's interesting.  I bought a new car back in April and it was cheaper for me to do financing and then promptly pay it off because you had to finance to qualify for some cash back incentives.  I guess it's YMMV on the details.

[smedleyb]

Yea - I know.  I've never purchased a new car and have always found used ones.  My current '98 with 210k mi has reached that cost/benefit threshold with repairs.  Looking at a smaller all wheel drive - I use this a lot in snow/moderate clearance roads for backcountry skiing, climbing, hiking.

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets.

Any reason you're not looking into a used car purchase? 

But yes, paying cash is the way to go.  Feel the pain immediately as all that potential income producing money flows out of your account and into the dealer's pocket. 

Regardless of which path you choose, it's important to adhere to this basic FIRE rule of thumb:  never spend more than 1% of your total new worth [primary residence value not included in calculation of net worth] on any vehicle purchase.   

Good luck!

[EnjoyIt]

Yea - I know.  I've never purchased a new car and have always found used ones.  My current '98 with 210k mi has reached that cost/benefit threshold with repairs.  Looking at a smaller all wheel drive - I use this a lot in snow/moderate clearance roads for backcountry skiing, climbing, hiking.

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets.

Any reason you're not looking into a used car purchase? 

But yes, paying cash is the way to go.  Feel the pain immediately as all that potential income producing money flows out of your account and into the dealer's pocket. 

Regardless of which path you choose, it's important to adhere to this basic FIRE rule of thumb:  never spend more than 1% of your total new worth [primary residence value not included in calculation of net worth] on any vehicle purchase.   

Good luck!

1% that's crazy. You telling me if all I have is $100k I can only buy a car for $1K?
What if I am retired with $2.5 million. You telling me I can afford to buy a $50k used Tesla?
I don't like your rule of thumb. It makes no sense.

I think a better rule of thumb is to buy a reliable model car with reasonable gas mileage that will give you the most bang for your available dollar.

[Slee_stack]

Any reason you're not looking into a used car purchase? 

But yes, paying cash is can be the way to go.  Feel the pain immediately as all that potential income producing money flows out of your account and into the dealer's pocket. 

Regardless of which path you choose, it's important to adhere to this basic FIRE rule of thumb:  never spend more than 1% of your total new worth [primary residence value not included in calculation of net worth] on any vehicle purchase.   

Good luck!

Fixed that for you.  Don't fall prey to emotion in any financial transaction.  You just advocated potentially reducing your income further by paying cash.

Don't buy anything if you don't need it (or get appropriate enjoyment/return on it).
Buy used where possible (and where savings is reasonable).
Pay the minimum that will meet those needs.
Use whatever payment method preserves your highest income stream given your risk tolerance.  Recognize that may or may NOT be cash.

[smedleyb]

Any reason you're not looking into a used car purchase? 

But yes, paying cash is can be the way to go.  Feel the pain immediately as all that potential income producing money flows out of your account and into the dealer's pocket. 

Regardless of which path you choose, it's important to adhere to this basic FIRE rule of thumb:  never spend more than 1% of your total new worth [primary residence value not included in calculation of net worth] on any vehicle purchase.   

Good luck!

Fixed that for you. Don't fall prey to emotion in any financial transaction.  You just advocated potentially reducing your income further by paying cash.

Don't buy anything if you don't need it (or get appropriate enjoyment/return on it).
Buy used where possible (and where savings is reasonable).
Pay the minimum that will meet those needs.
Use whatever payment method preserves your highest income stream given your risk tolerance.  Recognize that may or may NOT be cash.

Gordon?  Gordon Gekko?

This is still MMM.  We buy used, efficient vehicles off craigslist.  We eschew car loans.  We want the minimum insurance (more cash flow). 

That's my story and I'm sticking to it. 

[dude]

Yea - I know.  I've never purchased a new car and have always found used ones.  My current '98 with 210k mi has reached that cost/benefit threshold with repairs.  Looking at a smaller all wheel drive - I use this a lot in snow/moderate clearance roads for backcountry skiing, climbing, hiking.

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets.

I took advantage of a Subaru offer of 0.99% financing on Certified Pre-Owned Vehicles back in May.  Could easily have paid cash, but figured it made sense to keep my cash in the GNMA Fund that's been returning a steady 3.5% over the past several years.

[smedleyb]

Yea - I know.  I've never purchased a new car and have always found used ones.  My current '98 with 210k mi has reached that cost/benefit threshold with repairs.  Looking at a smaller all wheel drive - I use this a lot in snow/moderate clearance roads for backcountry skiing, climbing, hiking.

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets.

I took advantage of a Subaru offer of 0.99% financing on Certified Pre-Owned Vehicles back in May.  Could easily have paid cash, but figured it made sense to keep my cash in the GNMA Fund that's been returning a steady 3.5% over the past several years.

How much of that 2.5% gain is eaten up by income taxes and increased insurance premiums?  I would bet most if not all of it, and likely then some on top.

[Chris22]

Yea - I know.  I've never purchased a new car and have always found used ones.  My current '98 with 210k mi has reached that cost/benefit threshold with repairs.  Looking at a smaller all wheel drive - I use this a lot in snow/moderate clearance roads for backcountry skiing, climbing, hiking.

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets.

I took advantage of a Subaru offer of 0.99% financing on Certified Pre-Owned Vehicles back in May.  Could easily have paid cash, but figured it made sense to keep my cash in the GNMA Fund that's been returning a steady 3.5% over the past several years.

How much of that 2.5% gain is eaten up by income taxes and increased insurance premiums?  I would bet most if not all of it, and likely then some on top.

Are people really buying $20k cars and then self-insuring without collision/comprehensive?  That's penny-wise and pound-foolish if you ask me. 

[smedleyb]

Are people really buying $20k cars and then self-insuring without collision/comprehensive?  That's penny-wise and pound-foolish if you ask me.

Who's buying 20K cars to begin with?  That's pound foolish right there.

The sweet spot is in the 3-8K range, given the economic fundamentals of most Mustachians.   You better have a couple of million in income producing assets if you're looking at 20K cars. 

[Chris22]

Are people really buying $20k cars and then self-insuring without collision/comprehensive?  That's penny-wise and pound-foolish if you ask me.

Who's buying 20K cars to begin with?  That's pound foolish right there.

The sweet spot is in the 3-8K range, given the economic fundamentals of most Mustachians.   You better have a couple of million in income producing assets if you're looking at 20K cars.

That's one opinion.

[dougules]

I'm in the camp of interest rate matters.  (Of course that changes if you can use cash a bargaining chip or going debt-free makes you sleep better at night.)

[Khaetra]

I don't think there's anything wrong with financing.  I got a great deal on my Nissan years ago with all the combined incentives, so financing with a very low rate was a no-brainer.  I plan on financing my next one too.

I should note that while I took the financing I also paid it all off a month later.  Just make sure that whoever you deal with for financing will let you do it without penalties (BoA has penalties for early payoff in FL).

[Slee_stack]

Listen to your Uncle Smedley kiddos.  If its good for Uncle S., its good for you!  There's only one right way to do something and dontchafuhgeddit!

Kidding aside, the general suggestions are reasonable if just a wee myopic. 

Admittedly, the Kool-aid can be pretty tasty around here.

[smedleyb]

Listen to your Uncle Smedley kiddos.  If its good for Uncle S., its good for you!  There's only one right way to do something and dontchafuhgeddit!

Kidding aside, the general suggestions are reasonable if just a wee myopic. 

Admittedly, the Kool-aid can be pretty tasty around here.

There's plenty of personal finance sites dedicated to helping you achieve the best deal/terms when purchasing a new car.

There's very few sites that want to punch you in the face -- metaphorically, of course -- for even considering it.

Apparently some seek the former, yet have stumbled into the latter. 

[smedleyb]

1% that's crazy. You telling me if all I have is $100k I can only buy a car for $1K?
What if I am retired with $2.5 million. You telling me I can afford to buy a $50k used Tesla?
I don't like your rule of thumb. It makes no sense.

I think a better rule of thumb is to buy a reliable model car with reasonable gas mileage that will give you the most bang for your available dollar.

Yes, 1% is crazy.  As in "crazy high."  I personally like to keep it at around .5%.  That's the definition of "not feeling it" when you buy it.

[Forcus]

I have looked into this - problem is my first choice of Subaru - it's ridiculous how much folks want for a used one these days.  I picked up my last one with 25k miles on it - but out here it's either cars with 150k miles or ones with 20k miles but only $1500 cheaper than new, which is the reason I'm, reluctantly, going for new.    Seems the Subie crowd is hanging on to these things.

Could I convince you in to a FWD car with rally / snow tires and a slight suspension lift? A used 2012-14 Focus for around $10k and about $1k in mods? Just a thought, I have had a ball offroad or in adverse weather in my crapboxes. I have a couple spare light bars and I think I might throw one on my current FWD beater along with a small winch. Not knocking Subies at all, I'd like to have one some day.

I agree on the pricing. I've briefly looked at Subies (**manual transmissions only**), almost everything under $10k is utter crap with rust, high miles, and people want near new prices for 3 year old cars with 30k miles. I have heard that there are oil consumption issues with the newer ones and I don't know if that's been resolved. And of course the older ones head gaskets are issues (though from what I can tell it rarely results in a lunched engine.... just a gasket replacement).

[Syonyk]

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets.

If you get a discount you can only get through financing.

When we bought our Mazda 3 (new, yes, don't care, it'll last about forever and is radically nicer than the Mazda 2 it replaced), we got a $500 Mazda Loyalty Discount that was only an option with financing.

So we got financing and paid it off something like 3 months later (waited for a bonus to show up).

[Bettis]

On cusp of a good deal - is there any reason NOT to pay cash and avoid payments/interest?  It will make a very minor dent in the liquid assets.

If you get a discount you can only get through financing.

When we bought our Mazda 3 (new, yes, don't care, it'll last about forever and is radically nicer than the Mazda 2 it replaced), we got a $500 Mazda Loyalty Discount that was only an option with financing.

So we got financing and paid it off something like 3 months later (waited for a bonus to show up).

So if you don't finance, they won't take off the $500?  Whether it's a loyalty discount or some other way for them to finagle the number, are they really going to risk you walking by not dropping the price by $500?  I've never bought a new car so I'm asking an honest question, not trying to pick on you.  We bought a used car from a dealer and just kept grinding down the number as best we could and paid cash.  They boosted up the trade in rather than lowering the car price but the end result was still the same for me since the trade in was in bad shape and we didn't care enough to try to sell it privately.

[Syonyk]

So if you don't finance, they won't take off the $500?  Whether it's a loyalty discount or some other way for them to finagle the number, are they really going to risk you walking by not dropping the price by $500?  I've never bought a new car so I'm asking an honest question, not trying to pick on you.

I was using one of the "pricing plan" things through my employer on a new model year, so I didn't expect much price haggling either way.  Could I have negotiated a lower price?  Perhaps, though probably not on such a new model.  The convenience of "in and done" was worth it, and financing took another $500 off with no prepayment penalties.

[HAPPYINAZ]

Is there a way to buy a car with a credit card?  Anyone done this?  I would love to do this so I can reap cc rewards.