Quote:
Originally Posted by socale39
Paying cash for a brand new car is actually the opposite of what you want to do from a financial standpoint. Let's look at it from a few standpoints:
1) You'll take a depreciation hit soon after driving off the lot. In my opinion, buy a low mileage CPO and you'll get nearly all the benefits of having a new/newer car for 20-40% less.
2) Financing rates on new cars is usually so low, the amount you pay for that loan only accounts for a very small percentage of what you paid for the vehicle
3) Instead of using the cash towards an investment that will give you a return, you've locked your cash into a negative returning asset.
We all know that a vehicle is not an investment so from a financial standpoint why not mitigate your loss. Take half of a $60k purchase and put it into a conservative growth investment earning 8%. Not only will you cover all those taxes and fees from the initial purchase, but you'll also cover the interest charges of the loan for the entire duration of the terms. But more importantly, you now have a lump sum of cash sitting in an investment earning a return offsetting your expenses. Extrapolate that lump sum over a longer period of time and the benefits clearly out weigh the paying cash for new tractic.
If anything, let those more fortunate than you pay the full price of a vehicle and take the loss. Pickup a low mileage CPO and put more into an investment to give up a vehicle with a little more miles.
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THIS guy is right! Listen to him!
That's why I paid CASH for a 3 year old X5 50i. It had already depreciated a bunch, I got more car than I could afford new, and I paid no interest.