Finance or Pay Cash?

[dawnyp]

We will be buying a new car in the next couple of weeks and are trying to decide between financing and paying cash. After trade in we are likely looking at about $8-9K. We can get a 1.9% finance rate or pay cash. Part of me thinks it is best to just pay cash and not have the hassle of a car payment. If the money was invested we would earn interest but would it be enough to offset the interest payment?

[SJ]

If you are going to invest the money, I would finance the car.

If you are going to let the cash sit around in the bank earning 0%, I would pay cash for the car.

[Deleted]

I have never financed a car because I hate the idea of a car payment, but with a 1.9% interest rate it probably makes more sense to finance it.

[ohgillian]

I would pay cash, but that's b/c I wouldn't want the hassle of the car payment and b/c unless you're going to actually invest it (i.e., not just put it in savings or a CD), you aren't going to earn 1.9% on it. Which is terribly depressing, but true.

If you actually are sure that you wouldn't spend the money for other things, and you plan to responsibly invest it, then that's different, of course.

[Deleted]

i have never had a car payment and plan on keeping it that way. I;ve purchased 6 brand new cars and always paid in full at the dealership.
The only way I'd ever think of "financing" on would be if they offered 0% interest. And even then I think I wouldnt be crazy of the idea of a monthly payment

[h]

We just bought a new car and financed the entire thing (after trade-in) because we could get 0.9% financing. At that rate, I would rather keep the cash invested. I think I would still feel the same with 1.9% financing, assuming that you will actually invest the money.

[Deleted]

Will you get a rebate or discount if you finance? We got $1,000 off if we financed, which was more than we would pay in interest. It was a better deal for us to finance.

[aurora]

We paid cash, but that was more to avoid the hassle of monthly payments than anything else. It is smarter financially to finance at a low rate *if you will really invest the money* (and obviously if you make the right investment choices).

[dawnyp]

Thanks all. Yes we would definitely be investing the money and not just have it sitting around. We are going to the dealer on Friday to find out exactly what sort of promotions or discounts are availabe. If we get a discount financing may be worthwhile.