Car Shopping Question

[Flyingstache]

Hi Everyone

30yr old husband & wife with 2 kids under 3 & hopefully more on the way. Looking at buying a minivan & have a quick question

The plan is to pay cash - however - if they offer 0% interest for a certain length of time is it ever worth doing that?

General financial overview - both teachers so not making a ton but have really tried to save & be smart with our $. No debt other than our mortgage ($98k left on a $225k house purchased 3yrs ago). Have about $150k in investments & $55k in savings.

Thanks for any insights & have a great day!

[dcheesi]

Often there's a choice between 0% financing and some cash rebate, in which case it's worth doing the math on which one saves you more. Otherwise, 0% is fine.

If it's more like a 2% rate, then you also have to consider where you're going to park the un-spent cash, such that the expected return will beat that rate.

Seems like you have enough saved that you shouldn't end up cash-poor by paying cash (or moving equivalent cash to a higher-return investment), assuming that your car budget is reasonable?

[RWD]

Financing is typically preferable (see this recent thread). But should you really be buying a brand new vehicle? Based on your current financial position used would make a lot more sense.

[HipGnosis]

It looks like you'll pay off your mortgage quite soon (CONGRATS!!).
It would be good for your credit score to have a loan (in good standing).  Esp. if it's been a while since you had any other debt.
Your credit score influences your auto & home insurance, and a few other things.
I'm taking out a HELOC for some home improvements this spring for just this reason.

[cool7hand]

The numbers might work out in favor of financing over paying cash, but numbers aren't the only consideration. Whatever you think of Dave Ramsey, I agree with his observations about identifying your own psychology. For some people, they are more likely to make better financial decisions if they avoid debt altogether. If that's you, don't feel bad about the extra dollars you might have made with a lower interest rate and investing the difference. There's more than one way to skin a cat.

[zolotiyeruki]

If you absolutely, positively must buy from a dealership, you must negotiate the total price first before you talk financing, and DON'T tell them you're going to pay cash.

There are LOTS and LOTS of very informative videos on Youtube about how to negotiate most effectively.

All that said, I think you'd be better off getting a used Toyota Sienna, or as a second choice, a Honda Odyssey.  Great utility, fantastic reliability.

[Flyingstache]

Thank you all for the great suggestions & no worries - won't be buying new! Looking at Honda Odysseys currently (Honda plant is nearby) but will look into other suggestions also!

Thanks again

[Unique User]

We bought new as the difference between used and new (at least the one we found) was negligible and so few used cars were available within several miles.  We got a great deal on a 2020 vehicle, they offered us a rebate if we financed.  I took the rebate, confirmed several times that we would not have a prepayment penalty, financed it (at 3.5% interest) and paid it off immediately.  Just a thought if a rebate is offered. 

[slappy]

If you absolutely, positively must buy from a dealership, you must negotiate the total price first before you talk financing, and DON'T tell them you're going to pay cash.

There are LOTS and LOTS of very informative videos on Youtube about how to negotiate most effectively.

All that said, I think you'd be better off getting a used Toyota Sienna, or as a second choice, a Honda Odyssey.  Great utility, fantastic reliability.

Would you mind linking some of your favorites? I have had terrible luck with my last two used cars, and am considering buying brand new, although hopefully not for at least two years. The thought of car shopping is so terrible, I'd love to spend some time learning how to make it bit easier.

[zolotiyeruki]

If you absolutely, positively must buy from a dealership, you must negotiate the total price first before you talk financing, and DON'T tell them you're going to pay cash.

There are LOTS and LOTS of very informative videos on Youtube about how to negotiate most effectively.

All that said, I think you'd be better off getting a used Toyota Sienna, or as a second choice, a Honda Odyssey.  Great utility, fantastic reliability.

Would you mind linking some of your favorites? I have had terrible luck with my last two used cars, and am considering buying brand new, although hopefully not for at least two years. The thought of car shopping is so terrible, I'd love to spend some time learning how to make it bit easier.

I actually tried looking for the one I had watched several months earlier, but there are so stinkin' many videos on the same topic, I couldn't remember which was the one I watched.  Actually, I managed to find it (I think): https://www.youtube.com/watch?v=M8ezBezrTOs