Cash or Credit?

[Dan Mahalek]

In light of today’s terrible news on the economy, I was wondering, how many Telly owners or prospective owners paid cash or plan to pay cash for their car?

 

[Tobstertx3]

What was different about today than many other days in the last 3-4 months?

 

[noles1983]

What was different about today than many other days in the last 3-4 months?

Probably referring to this:

US economy posts its worst drop on record

The US economy contracted at a 32.9% annual rate from April through June, its worst drop on record, the Bureau of Economic Analysis said Thursday.

www.cnn.com

 

[jw_tx21]

Probably referring to this:

US economy posts its worst drop on record

The US economy contracted at a 32.9% annual rate from April through June, its worst drop on record, the Bureau of Economic Analysis said Thursday.

www.cnn.com

Last quarter is history... that news is already a month old. This quarter will have a rebound.

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[noles1983]

Last quarter is history... that news is already a month old. This quarter will have a rebound.

I'm not here to debate or play an economist. I was simply providing context, for the record if I had to guess, I'd guess you are wrong. Well I mean, depends on rebound. Anything better than a 32.9% drop could technically be considered a rebound.

 

[jw_tx21]

I'm not here to debate or play an economist. I was simply providing context, for the record if I had to guess, I'd guess you are wrong. Well I mean, depends on rebound. Anything better than a 32.9% drop could technically be considered a rebound.

Yeah, I know. My only point is that Tobster's response is valid - there was a severe drop in Q2 which was forecast correctly - so there's nothing different about today vs any other day in the recent past. There will be positive growth in the 3rd quarter - it won't be enough to totally negate the 33% drop, but it's unlikely to be negative. With all the stimulus and cash the government is handing out (perhaps to the detriment of future generations with a higher debt burden) the economy chugs along... as does the stock market.

 

[Wee]

In light of today’s terrible news on the economy, I was wondering, how many Telly owners or prospective owners paid cash or plan to pay cash for their car?

elaborate further. What are you getting at?

 

[MarcinTexas]

In light of today’s terrible news on the economy, I was wondering, how many Telly owners or prospective owners paid cash or plan to pay cash for their car?

I am handling my purchase the same way I would in any economy. Paying as much in cash as I can and financing the rest over five years. For me that means I will finance about $25K+/- and then pay the car off as quickly as I can to start saving for my down payment for the next vehicle purchase down the road.

Put simply - if you are concerned about your job - you probably shouldn't be buying a new car. If your job is secure - then go about your normal life. Anyone watching the news the past few months knew the contraction would be severe. That's what happens when people are in a forced lockdown situation. This will pass as all economic crisis do. For me - about the only change I made was to opt to not purchase a new Yukon which was what we thought we might do this year. Last winter I made the decision to pursue the Telluride so I could have a cheaper vehicle to have paid off before my daughter starts college. Getting a $50K vehicle seemed much more financial sound than buying a $75K vehicle with college bills looming. This COVID-19 mess - just confirmed my decision that buying less than you qualify for is the best route to take so that when things like this happen you don't stress about it.

That said - if I win the lottery - a new Yukon Denali will be in my garage ASAP. LOL...then my daughter can have the Telluride.

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[Tabascoag]

If you can get 0.9%/48 mos, why pay cash? That's pretty close to free money. Now if there was an incentive to pay cash by the dealership (there's not), it would be different.

 

[MarcinTexas]

If you can get 0.9%/48 mos, why pay cash? That's pretty close to free money. Now if there was an incentive to pay cash by the dealership (there's not), it would be different.

All a personal preference. I like having small payments on things. I also like having things paid off as soon as possible - which gives more financial freedom. Which allows for saving up for your next down payment faster. I hate debt with a passion. Smaller monthly payments mean I can double up and get it knocked out in a couple of years and then plow money into things like college funds, maxing out my 401(k), paying off my house faster and accumulating cash for a rainy day. Some of the payments I see people talking about for their cars simply terrify me. Hopefully -this will be the last car loan I ever have.

 

[reigndeerz]

If you can get 0.9%/48 mos, why pay cash? That's pretty close to free money. Now if there was an incentive to pay cash by the dealership (there's not), it would be different.

I'm in the same camp here!

 

[DigMyRide]

I am considering the .9%/48 month (if it exists when my Telly arrives - ETA Sept) as that is very cheap 'money'. The stock market has seen 20%+ gains since April and many stocks like Apple, Google, Tesla have done much better than 20% since March. Cash on hand seems to make more sense given opportunities to invest elsewhere; IMO.

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[My Car is a 2001]

I'd guess that most people who can pay all cash are probably looking at other brands besides Kia (Audi, BMW, etc). With that said, I agree with @MarcinTexas that it's a personal preference with how much cash you can part with for the down payment.

My Telly is $48.5K and I'm putting $15K down. Thankfully, my job is secure (knock on wood) however I need to factor in my wedding this year (if it can still happen), honeymoon (if we can still travel *anywhere*), and purchasing a house next year (in California). Lots of major question marks, but my company and industry are proving resilient through the pandemic.

If you haven't already, I recommend having an honest conversation with yourself about how much car you can afford: total monthly income, total monthly expenses, and then working in your down payment + monthly down payment. If anyone likes, happy to share the budgeting worksheet I built to determine how much car you can afford.

This is the first time I'm purchasing a car so it was quite revealing going through this exercise.

 

[alexdrums]

That said - if I win the lottery - a new Yukon Denali will be in my garage ASAP. LOL...then my daughter can have the Telluride.

I am impressed you could fit one of those monstrosities in your garage. Where I live everyone seems to park them outside.

 

[Kirbo]

I'd guess that most people who can pay all cash are probably looking at other brands besides Kia (Audi, BMW, etc). With that said, I agree with @MarcinTexas that it's a personal preference with how much cash you can part with for the down payment.

Excellent points about really figuring out what you can afford, but this sentence I disagree with. I think plenty of folks pay cash for the cars they can afford. My dad always paid cash and that meant his cars didn't have bells and whistles since he bought cars when the wheels fell off and bought what was in his budget. I know others that pay cash and their cars aren't BMW or MB but Fords or Chevys.

 

[mgoblue]

I'd guess that most people who can pay all cash are probably looking at other brands besides Kia (Audi, BMW, etc). With that said, I agree with @MarcinTexas that it's a personal preference with how much cash you can part with for the down payment.

My Telly is $48.5K and I'm putting $15K down. Thankfully, my job is secure (knock on wood) however I need to factor in my wedding this year (if it can still happen), honeymoon (if we can still travel *anywhere*), and purchasing a house next year (in California). Lots of major question marks, but my company and industry are proving resilient through the pandemic.

If you haven't already, I recommend having an honest conversation with yourself about how much car you can afford: total monthly income, total monthly expenses, and then working in your down payment + monthly down payment. If anyone likes, happy to share the budgeting worksheet I built to determine how much car you can afford.

This is the first time I'm purchasing a car so it was quite revealing going through this exercise.

With all those other purchases, there’s an argument that you should put LESS down on your Telly and use that $15k for other more useful needs. Car financing will be cheaper than credit cards and mortgage.

______________________________

 

[noles1983]

I'd guess that most people who can pay all cash are probably looking at other brands besides Kia (Audi, BMW, etc). With that said, I agree with @MarcinTexas that it's a personal preference with how much cash you can part with for the down payment.

My Telly is $48.5K and I'm putting $15K down. Thankfully, my job is secure (knock on wood) however I need to factor in my wedding this year (if it can still happen), honeymoon (if we can still travel *anywhere*), and purchasing a house next year (in California). Lots of major question marks, but my company and industry are proving resilient through the pandemic.

If you haven't already, I recommend having an honest conversation with yourself about how much car you can afford: total monthly income, total monthly expenses, and then working in your down payment + monthly down payment. If anyone likes, happy to share the budgeting worksheet I built to determine how much car you can afford.

This is the first time I'm purchasing a car so it was quite revealing going through this exercise.

I'm curious about that worksheet you have made

 

[My Car is a 2001]

With all those other purchases, there’s an argument that you should put LESS down on your Telly and use that $15k for other more useful needs. Car financing will be cheaper than credit cards and mortgage.

It’s a good point you raise. My current car has already rounded the final turn of its life and is racing towards the finish line, so it is needing to be replaced. Many ways to steer this convo, but simplest is my fiancée and I have have a carefully built savings plan for those purchases and adding the new car expense does not disrupt the plan or timeline

 

[MikeB]

There will never be an incentive to pay with cash because a dealer makes more money on leases and financing
.

 

[Tabascoag]

There will never be an incentive to pay with cash because a dealer makes more money on leases and financing
.

I know, with the exception of many businesses are in a desperate influx of cash due to recent events. Still apparently not an issue with dealerships.