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Old 10-28-2011, 10:51 AM   #88
sooshimon
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Member#: 34880
Join Date: Apr 2003
Location: Georgia
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Quote:
Originally Posted by Steve.804 View Post
Why pay cash for a car? If you can finance for say .9%-1.9% (as most car dealerships are having special rates at this time, some are even 0%) would it not make more sense to put your money in an investment fund that is more profitable and use the banks money to fund the vehicle? If you finance a $30k car for 1.9% you're paying a whopping $570 in interest spread evenly over the course of the loan. Most people go for a 60mo term which would be less than $10 a month. I'd rather keep my money where it's at and just pay it
I agree with this approach but have to make one minor correction. I'm pretty sure it's not going to cost you only $570 in interest spread evenly over 60 months. Your total interest charges according to the kbb.com calculator will be $1,471.29. So for the cash paying people, they might ask why spend $31,471.29 when you can spend $30k (plus maybe they're not risk takers).

However, I agree that if you can find something worthy of dumping your $30k into that will yield a return much greater than $1,471.29 in 5 years, then this approach makes good sense.

You'd also have to consider than anything with a high yield is also high risk and likewise low risk low yield. Thus it may not be THAT easy to find an investment that will make give you a decent return within 5 years.

If it is that easy, please let us all know!
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