Cash or Loan?

[Mike D]

In your scenario where the guy loses his job at year one...what would he be better off with... $35k in cash and $750 truck payment or a paid off truck and broke?

If he makes a poor decision and buys a truck when he has no other savings then he was a fool to begin with.

But in your scenario, if he has a paid off truck he isn’t broke. He can get cash out of it quickly. Then he can buy a vehicle he can actually afford.
The bank is still gonna want their $750 whether he has a job or not.


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[randal]

If I could pay cash I would, I understand what everyone is saying about make money else where and this and that but if you pay cash you own it..

[BitBackShot]

Everyone's situation is obviously different. I pay cash, but that's because I can easily afford to and don't use my truck as a money-making tool that factors into the cash flows of my business. For many, it does, and they have to finance the vehicle to make it work. And that's fine.

The first step should be to figure out what makes the most sense for your own personal situation. If money is tight, do not be stupid and trick yourself into thinking you need leather and bling'd out rims and since that only amounts to an additional $100/month, it's worth it! Be frugal. We (wife and I) have lived our entire lives as if we made 1/3 the money we do so that we never have an issue. I still don't have the frills and bells and whistles and I don't care.

The "you can always make more elsewhere!" is also dumb. How's the market done these past few months?

[AgHntr10]

Can you run the scenario where the guy loses his job at the end of Year 1? What does he do then?

Also, did I miss where you adjusted for the IRS's cut of those stock market gains?

I would rather have that 40K nest egg in the bank if I lose my job and just have to worry about ~$600/month on the truck until I get another job.

[bbqfan5909]

With a 40k nest egg, I am assuming all your debt is paid for minus the truck? Id much rather take a lesser truck that is paid for and if gets bad, take unemployment to pay for things needed, not a $600 a month truck note.

I would rather have that 40K nest egg in the bank if I lose my job and just have to worry about ~$600/month on the truck until I get another job.

[kgrutzmacher]

If you're going to do cash, you can probably actually do better by financing it and then paying the loan off right away. Dealers make money off the loans, so they'll often times give you a little better price if you finance it (dealer incentives, etc). Just make sure no pre-pay penalties, etc.

^^ This - get a rebate and finance and pay off with the 1st payment. The dealer gets their kickback for the finance and you get the added rebate / discount.

[sahunter]

tagged

[sharpstick35]

I recently bought a 2015 gmc Denali for 52k. Put 20k down on it. The payments are 632 a month but I never send in less than 800 but usually 1k. The only other debt I have is 80k on my hunting property. Everything else is paid for

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[double bogey]

Pretty sure there are no true 0% loans out there. Talking to a finance guy about available financing for my ac customers, when they run 0% deals, you add as much as 20% upfront. And they require you not to disclose this to the customer.

[dcran]

I would follow Dave Ramsey's advice... pay cash and instead of getting a brand new truck, get one that is a couple of years old. You'll pay a whole lot less and won't be tied down in case something bad happens like losing your job, etc. Loans on anything other than an appreciating asset or something that actually makes you money is just a form of financial slavery.