Buy used and pay cash. Usually loans are expensive in terms of interest and additional charges. Also, people tend to buy a more expensive car than they need since the payments seem affordable. Lastly, your time has value. The time used to make the monthly payments is time best used on something else. I argue that even a minute of Netflix is a better use of your time.
Ask HN: Should you buy a car with cash if you can afford it?
21–30 of 37 posts
Re: Ask HN: Should you buy a car with cash if you can afford it?
#22You guys assume a lot of self-discipline. I see a large amount of cash in my bank account, I'm going to be buying a lot of unnecessary luxuries and some unnecessary necessities (insurance, air conditioner, leather seats for that new car...)
But if it's really a necessity, just buy it rather than trying to optimize for that 1% extra income.
Re: Ask HN: Should you buy a car with cash if you can afford it?
#23Earlier quoted context omitted.
How does the IRS even find out you buy a car? There’s no federal sales tax. You just pay your state taxes. If it’s a “nothing fancy” car, maybe a 30k accord or less, and he has a good income, it’s not going to raise any flags with either state or fed. Bottom line - pay your taxes and you’ll be fine. I can’t emphasize enough how good a feeling it is to have the title to your own car.
the IRS would find out when the seller reports the sales income, unless the seller is truly crooked and cooks thier books up in some way, such as fees to a consultant who died in a house fire thus all his records are burned and gone.
Is there a federal sales tax on cars?
Re: Ask HN: Should you buy a car with cash if you can afford it?
#24Buy used and pay cash. Usually loans are expensive in terms of interest and additional charges. Also, people tend to buy a more expensive car than they need since the payments seem affordable. Lastly, your time has value. The time used to make the monthly payments is time best used on something else. I argue that even a minute of Netflix is a better use of your time.
This is the correct answer. I have done it all over the years and nothing beats buying a used car and paying cash for it. Don't let people tell you that oh you can make more money in interest outside blah blah. They forget to tell you that what if you need to sell the car quickly for any reason, then what ? You could end up being under water comapred to the loan. If you finance a car, you are paying a lot of interest for nothing.
Here are my steps:
1. Look for a used car (reliable brands only like honda/toyota) on craigslist/facebook or directly from a seller. Check values on KBB.com or similar websites to compare what you should pay for a car like that.
2. Get a mechanic to check it for like $100/$150.
3. Buy it out with certified check to the seller. If dealing with a dealer, do not add any extra warranty crap. Just buy the damn car. If you are buying a reliable brand, it shouldn't matter.
You can do Step 1 with a dealer also and then you may not need Step 2 BUT dealers will always add a premium to the total cost. If you don't want the hassle of dealing with individual sellers, dealers are your best bet. DO NOT GO TO scummy auto centers that are not proper dealers. They would mostly sell you crap.
Re: Ask HN: Should you buy a car with cash if you can afford it?
#25If you can get 0% apr for 60/72 months, why not do that? Also seems like there is more negotiation done when financed vs cash. https://www.carfax.com/blog/0-apr-car-deals
It’s not really a zero percent loan. To test that, tell the dealer you are paying cash, make your best deal, and then at the last minute say you changed your mind and want a zero percent loan for the same price. See how that goes. The money that goes to purchase your car, is invested money that earns a non-zero return, whoever it comes from. If you have the cash, you be that investor, and you earn the return. The man…
It still is a zero percent loan, though. The price that you pay for the car isn’t the same, I agree, but the loan is 0 percent. The OP wants a way to preserve capital for other investments, so paying cash upfront defeats the purpose.
Re: Ask HN: Should you buy a car with cash if you can afford it?
#26Pay cash and buy a car as a means of transport rather than an extension of your ego.
[Advice I should have given myself many years ago.]
Re: Ask HN: Should you buy a car with cash if you can afford it?
#27Pay cash and buy a car as a means of transport rather than an extension of your ego. [Advice I should have given myself many years ago.]
Buy the car you can afford, anything else is being judgmental.
If op likes cars and can afford, why not buy a nicer car?
Re: Ask HN: Should you buy a car with cash if you can afford it?
#28Earlier quoted context omitted.
the IRS would find out when the seller reports the sales income, unless the seller is truly crooked and cooks thier books up in some way, such as fees to a consultant who died in a house fire thus all his records are burned and gone.
Is there a federal sales tax on cars?
im sure there is a federal tax on annual revenue, regerdless of what your business sells
Re: Ask HN: Should you buy a car with cash if you can afford it?
#29Buy used and pay cash. Usually loans are expensive in terms of interest and additional charges. Also, people tend to buy a more expensive car than they need since the payments seem affordable. Lastly, your time has value. The time used to make the monthly payments is time best used on something else. I argue that even a minute of Netflix is a better use of your time.
This may not be the correct choice in the current market. Usually this is true but used car premiums are insane and the discount may not be worthwhile. The car market is messed up right now so you might be able to get a better deal on new If you can find one in stock close to msrp
Re: Ask HN: Should you buy a car with cash if you can afford it?
#30It really depends on the financing rate. At below 3.0%, it doesn't make sense to put too much cash into a depreciating asset like a car when your money could be put toward other investments that can probably net more than 4% return. I still feel better paying off a car in 3 years rather than 5, so I usually suggest making a few extra payments to make that happen. You will get a better deal with more incentives with d…
Weird. Why would they do that?
The manufacturer has several reasons to push the buyer to financing.
More options to adjust pricing with dealers.
Repayments provide steady cash flow when sales are lagging. A auto finance business can become a general finance business (see Ally née GMAC) which may experience different business cycles than the auto business.
Loan servicing provides a marketting channel and a legitimate interest in monitoring borrower credit (which could be used to tailor marketting).
Promoting purchasing vehicles on credit may encourage borrowers to consider a new purchase when the loan is paid off.