When did it become offensive to pay cash for a car?

[nadine_doa]

I notice I've been getting myself into trouble in other fora.

A certain luxury brand has let it slip that about 50% of their car sales are financed by the luxury brand's finance arm.

I think that is absolutely ridiculous. OK, people can do whatever they want and they will, partly because they see other people doing it. And we all know delayed gratification is as rare as hen's teeth.

And I get that people need transportation to get to work and so forth. But do they need a luxury brand?

So recently I opined that if you have to finance your new leather-seats-premium-stereo-GPS'd magic carpet, you can't afford it. Note that this was a general observation, not an attack on any specific person.

For this I was attacked, called "pretentious" (?), and sternly lectured on the good sense involved in taking a low-low-low interest rate loan.

It's weird because I'm not used to being told that saving for the luxuries you want is "pretentious." Apparently the luxuries are now deserved, instead of aspirational, and going into debt for them is just what everyone does. Life is hard, you know, and even harder when you're in your thirties and you don't drive an expensive sports car.

Do people ridicule you for saving? Do they resent you for not being a sheep?

[TexasHusker]

In the era of artificially-low interest rates due to government manipulation of the treasury market, I've financed my cars. I just bought my son a 2016 4Runner and financed every dime. I could have written a check for the car, but why would I hand someone my hard-earned $28,500 when I can borrow that amount for 2 percent APR, which is practically free? My decision wasn't made because of anyone else but yours truly. If you want to pay cash for your car, be my guest.

I've got lots of other things I can do with the cash, including buying more real estate or helping fund a new franchise location.

I find it amusing that you call out those "sternly lecturing" you, while simultaneously chastising others for doing what "they see other people doing", buying luxury instead of just a car, and inferring instant gratification. None of these are why I finance my cars. Maybe if you step off of your judge bench for a bit, you might notice that there are other valid points of view in addition to your own.

[Fishindude77]

It kind of "stumps" the sales personnel anymore when you are at the dealership looking at a vehicle and inform them that this will be a cash purchase. They much prefer to clean up your old loan and conceal the price of the new vehicle purchase and price of your trade, and just quote you a monthly payment amount. Had one salesman pushing me hard to take out a loan rather than pay cash and telling me how much of a better deal it would be.

I get all the reasons why people take loans, but I'm just done with paying interest, borrowing and debt. Let the other guys support the lenders and banks.

[nadine_doa]

I get all the reasons why people take loans, but I'm just done with paying interest, borrowing and debt. Let the other guys support the lenders and banks.

When DH bought his Nissan Leaf, he told them he was paying cash. They came back and said that if he financed the car through Nissan Credit, he'd get another $2,400 off the purchase price. And he could pay off the loan as early as four payments in.

So I wrote big checks to Nissan Credit for a few months.

But doesn't it make you think when they offer programs like that? They're not losing any money on the car, they can't be. I think Tesla is the only entity that can do that and still stay in business. So maybe the dealership was getting a concession from Nissan by signing us up for a loan, however short the duration might be. And the margins on the sale must be substantial because they had already given us a "Costco discount."

It's obvious to me that they're trying to obscure the real price of the car and thus, how much they make. That's why I wonder about even the low-low-low interest rate loans. Are they really a good deal or do they just look like one? It's not like you can get get the same make/model vehicle without the "I would be stupid not to take this" loan somewhere else; all dealerships of a certain manufacturer offer the loans. What would you be paying if customer incentives and concessions were removed from the picture?

[disneysteve]

So recently I opined that if you have to finance your new leather-seats-premium-stereo-GPS'd magic carpet, you can't afford it.

For this I was attacked, called "pretentious" (?), and sternly lectured on the good sense involved in taking a low-low-low interest rate loan.

When DH bought his Nissan Leaf, he told them he was paying cash. They came back and said that if he financed the car through Nissan Credit, he'd get another $2,400 off the purchase price.

So I wrote big checks to Nissan Credit for a few months.

You start the thread by criticizing/insulting people who finance their cars only to then tell us why your husband financed his car. He did it because it made good financial sense to do so. Has it occurred to you that maybe others have done it for the very same reason?

It is not at all unusual to get a better deal on the car when you are taking dealer financing because they make money on the loan so they're more willing to negotiate the sale price.

As TexasHusker said, with super low loan rates, sometimes as low as 0%, it's stupid not to take the financing. Why hand over a pile of cash if you can make more money by taking the loan?

Yes, there is a rule of thumb that if you have to borrow to purchase a luxury item you can't afford it, but a lot of people don't need to borrow the money. They choose to borrow because it makes sense to do it that way. Dave Ramsey would disagree but not all debt is evil. Debt can be a powerful financial tool used carefully and responsibly.

[Benderz]

I know the math and how to play the spread on the interest rates vs investment returns. But even though i can probably afford any reasonable new car, I always buy a 4-5 year old car for cash. Except for my first car out of college which was a mistake (financially). My children will do the same thing.

[TexasHusker]

I know the math and how to play the spread on the interest rates vs investment returns. But even though i can probably afford any reasonable new car, I always buy a 4-5 year old car for cash. Except for my first car out of college which was a mistake (financially). My children will do the same thing.

Financially speaking, a 4 year old car is really the sweet spot: It's often half or less what it sold for new, yet only a fourth or so of its useful life has been expended. So that's not a bad deal really.

Two years ago, I bought a 2010 Land Cruiser for around $38K that I swear looked brand new and still does. A new Land Cruiser is near $85K and is indiscernible from mine unless you are a really educated Land Cruiser enthusiast. It's nine years old but is bullet proof and I'll likely keep it a good long while.

We lease my wife's Range Rover. We will switch it out every 36 months for another one. Not a smart move financially, but it does satisfy my periodic new car itch and we only do it with one car, plus I don't have to do much repairs and maintenance in that lease period besides oil changes, so that is a huge benefit.

[Benderz]

Not a smart move financially, but it does satisfy my periodic new car itch and we only do it with one car, plus I don't have to do much repairs and maintenance in that lease period besides oil changes, so that is a huge benefit.

Leases are not the best financially, but as long as you say out loud that this is a luxury and your finances allow, its just another way to enjoy your disposable income.

As you know I'm passionately anti-debt. If you do take out a car loan, keep two points in mind. First most of the time you spend more if you buy via a loan then if you pay cash. Second, even if you can afford it, your loved ones are watching you. Debt is a leading cause for depression, divorce, death (suicide), and general unhappiness in our society. If you are reading this you are probable better than most and able to control you finances to where you can benefit from the spread. But the people around you, who the majority have no business using debt, are watching end emulating you. I can afford almost any new car, but I will never buy one or take out a loan because i want the best for my children. (same with credit cards btw)

[disneysteve]

If you do take out a car loan, keep two points in mind. First most of the time you spend more if you buy via a loan then if you pay cash.

Except that isn't necessarily true, as already mentioned earlier in the thread. Sometimes - fairly often actually - you get a better deal if you finance. If the manufacturer is offering a great interest rate and/or cash back when you finance, you can pay less than if you paid with cash.

You need to run the numbers and consider your options and choose the method that makes the most sense.

This is such a common issue that the salesperson frequently won't commit to a price until they know how you will be paying - cash or financing - because that affects the sale price they will give you.

[Captain Save]

I notice I've been getting myself into trouble in other fora.

A certain luxury brand has let it slip that about 50% of their car sales are financed by the luxury brand's finance arm.

I think that is absolutely ridiculous. OK, people can do whatever they want and they will, partly because they see other people doing it. And we all know delayed gratification is as rare as hen's teeth.

And I get that people need transportation to get to work and so forth. But do they need a luxury brand?

So recently I opined that if you have to finance your new leather-seats-premium-stereo-GPS'd magic carpet, you can't afford it. Note that this was a general observation, not an attack on any specific person.

For this I was attacked, called "pretentious" (?), and sternly lectured on the good sense involved in taking a low-low-low interest rate loan.

It's weird because I'm not used to being told that saving for the luxuries you want is "pretentious." Apparently the luxuries are now deserved, instead of aspirational, and going into debt for them is just what everyone does. Life is hard, you know, and even harder when you're in your thirties and you don't drive an expensive sports car.

Do people ridicule you for saving? Do they resent you for not being a sheep?

The reason they call you "pretentious" is because they probably think that you're some sort of super wealthy individual who looks down on people financing their cars.

They probably are not aware that you are a saver.

To them it seems as if you're bragging.

[TexasHusker]

Leases are not the best financially, but as long as you say out loud that this is a luxury and your finances allow, its just another way to enjoy your disposable income.

No deal. I'm not saying it out loud because it's no one else's matter.

[greenskeeper]

new cars are boring.

where else but a 21 year old pickup truck would I get the enjoyment of replacing a rear section of brake line, trying to double flare with brake fluid running down both my arms?

Did this repair today...21 years is a pretty good run for steel brake lines in the rust belt.

Quoted price for repair...$470

Actual cost doing it myself...$21.18

[Benderz]

Except that isn't necessarily true, as already mentioned earlier in the thread. Sometimes - fairly often actually - you get a better deal if you finance. If the manufacturer is offering a great interest rate and/or cash back when you finance, you can pay less than if you paid with cash.

Exactly why it is more expensive. I always buy a 4-5 year old car from an individual. Never a new car or from a dealer because i dont want the higher cost of ownership.

If you want to buy a car from a place that finances then you might save a little on that deal. I never will because by my example i dont want my son to think its ok to sign up for a $450 per month car payment in his 20s

No deal. I'm not saying it out loud because it's no one else's matter.

Well i meant admitting it to yourself. Its perfectly fine to lease or buy a new car as your truthful to yourself.

[bjl584]

I'm constantly told that I work too much and save too much. Mostly by broke lazy people.......

[myrdale]

I am currently saving for a new Toyota pickup truck. I am planning on budgeting $35k for the purchase, but hope to be in the $30k to $32k range. Assuming everything goes to plan, I intend to save $40k before making the purchase. I will look at my situation at that point to determine if I pay cash or just get a loan and pay off shortly there after.

My Mother discussed this plan with an aunt and uncle, and came back with a lot of feed back from my uncle of what a horrible idea this was. It would make me a target for IRS audits, and I would loose tax benefits (I am talking about a car, not a house) and a few other off the wall thoughts. While I am sure he is well meaning in all of his advice, I think he is much like your average American who thinks a car payment is just a way of life.

In the mean time, I am still saving, and assuming the current truck doesn't fail, I hope to be in a situation to go either route some time next year maybe.