Pay in Full vs Take Loan for New Car

[Saviourwu]

Hi Guys,

 

Just want to check, if you have the cash, would it be more advisable to pay in full or still take loan when we buy a car?

 

There are usually quite a number of rebates and freebies if you take loan...

 

 

 

 

[Icedbs]

Of course pay in cash!

 

If a car loan is structured like a mortgage loan, I will say take the loan

 

 

Edited May 25, 2012 by Icedbs

[Vincesphrth]

Take a loan based on the Current low interest rate.

 

The cash on hand can easily generate more cash than the interest paid.

Edited May 25, 2012 by Vincesphrth

[Steptronic]

The present rate of 1.88% is a flat one and not on reducing balance like home loans. It would be equivalent to about 4% on reducing balance method. Now, it is simple:

 

1. If you can get a guaranteed return of more than 4%, then go for loan.

2. If you cannot get, then pay cash and buy.

 

The discounts and freebies you get would not even worth taking about. The interest on every 100k @ 1.88% for 7 years is around 13k total.

 

All the best!

[13177]

If you have lots of spare cash, confirm should pay full cash when buy a car. Not worth paying the interest over the loan period.

[1fast1]

I used to be an advocate of loaning and investing the spare cash. Now, having two cars without a loan, I'm a firm advocate of buying in cash if you can afford it. It's great to be debt-free (or at least "bad" debt-free).

 

The current low interest rates are highly deceptive. The only reason they've gone so low is because cars are vastly overpriced. The COE can't stay so high forever, and when it crashes, taking the used market with it, lots of people taking high quantum (or worse, 100%) loans are going to be stuck deep in negative equity with no way to dig themselves out of it.

Edited May 25, 2012 by Turboflat4

[The_Bear]

I do at least 50% cash with 3 year loan. Keep the remaining cash for targets of opportunity or contingencies.

[Meanmachine]

I still take a loan, based on the followings,

 

Low interest rates, Track records of finance coy and no rebates by finance coy whateverso ever.

 

Borrow at least 50%, not more than that, once you take 80% loan, the parting of car when one sell was a disaster, negative equity and need to top-up cash.

 

Nvr never do that.

[Friendstar]

by asking this question...

 

I can safely advise u to pay in full instead of taking loan, if you can afford.

 

 

[13177]

When buying car, best is either pay cash in full or loan as little and shorter you can.

[ins1dious]

I think a good cash down and a tenure of 5-7 years is acceptable with these low interest rates. I tend to have other uses for my cash that earns me more than what I pay as interest.

[Vega]

pay in cash. the "debt free" feeling is priceless.

[Darthrevan]

The present rate of 1.88% is a flat one and not on reducing balance like home loans. It would be equivalent to about 4% on reducing balance method. Now, it is simple:

 

1. If you can get a guaranteed return of more than 4%, then go for loan.

2. If you cannot get, then pay cash and buy.

 

The discounts and freebies you get would not even worth taking about. The interest on every 100k @ 1.88% for 7 years is around 13k total.

 

All the best!

 

indeed..the freebies are not even worth the interest charged..i would rather pay in full and utilize the savings to buy the "freebies"

Edited May 25, 2012 by Darthrevan

[Enye]

Wah this forum really elite.

 

Nowadays low end B&B new car also chin chye chin chye ~$100K. TS had not even mentioned what car.

 

How much % of spare cash/total assets to spend on new car in order not to feel the pinch of paying full cash?

 

If assume 10% or less, then minimum spare cash/assets is $1 million.

 

Can I assume people who advocated paying full cash are all millionaires?

[The_Bear]

Wah this forum really elite.

 

Nowadays low end B&B new car also chin chye chin chye ~$100K. TS had not even mentioned what car.

 

How much % of spare cash/total assets to spend on new car in order not to feel the pinch of paying full cash?

 

If assume 10% or less, then minimum spare cash/assets is $1 million.

 

Can I assume people who advocated paying full cash are all millionaires?

 

TS stated "Just want to check, if you have the cash, would it be more advisable to pay in full or still take loan when we buy a car?"

 

So it is with the assumption that there is enough cash to purchase the car in full. A hypothetical scenario.

 

Agree that this forum quite elite though.

Edited May 25, 2012 by Bavarian

[Enye]

TS stated "Just want to check, if you have the cash, would it be more advisable to pay in full or still take loan when we buy a car?"

 

So it is with the assumption that there is enough cash to purchase the car in full. A hypothetical scenario.

 

Agree that this forum quite elite though.

 

Seems more and more people have the table wiper's mentality.

 

We can rename MCF as My CashForum very soon.

[Celicar]

Unless default and write off, bank is sure earn one, you can be sure you are paying for those 'freebies'. No free lunch.

[Nzy]

I pay in cash also. As long as its less than 20% of whatever you have IMO just pay in full.

Edited May 25, 2012 by Nzy