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4 Comments
I truly hate financing a depreciating asset. It’s like losing money twice. You pay interest & the underlying asset is losing value. I always try to pay at least 80% of every vehicle purchase in cash.
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I am proud that I used hard cash to buy my car. It just took me some years to save for it but it’s really worth it after all.
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If you’ve got the cash, it feels so much better to just pay outright for the car than it would to pay for it each month instead. I’m dreading our next car purchase — we paid cash for our last car and I want to do it for our next one, but we don’t have the savings right now and I keep feeling like we’re pushing our luck with our ’99 Corolla, with 150,000 miles on it.
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I think cash is always the best option, if it is an option. Financing can be an option, but leasing should never be an option. I’m with you though, I dislike debt entirely.
There are some cases where I feel like it’s find to finance a vehicle, as long as the interest rate is less than 3% and you pay it off early. I always tell people to look at the total cost of financing. If it’s say, $1,000, over the 5 years you’re paying off the vehicle, ask yourself if it’s worth $1,000 to be able to buy that vehicle. In some cases, it may be worth financing for a short time to avoid depleting all your cash reserve and/or to buy a vehicle that is more dependable, which means putting less additional money into it.
It really comes down to personal priorities. For people like us (who have been there and done that), being debt free is priority #1. 🙂
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