hbrown30

Have a few questions about financing/money. Just graduated college and lucky enough to have around 100k+ saved through numerous inheritances/investments. I am looking to buy a slightly used 2009 TL. The prices I am getting are around 28-30k for a TL Tech with 15-20k miles on it. My trade in is around $7 and my father offered to put another $8-10K down on it. So I would be looking at a difference of roughly $10k. Ok the question is should I finance it at 3.99% for 48 months or just take the $10k out of the account and pay it all in cash? Thanks for your suggestions!

P.S. I currently don't have a job thus no income but I am actively searching and should hopefully find something during the summer. Thanks again!

Litt

Hi Hbrown,

I would love to say go and buy the car, but perhaps you should wait until you actually have secured an income. This is a very uncertain economy and there are a lot of unemployed or underemployed people. Another wave of millions of 2010 graduates is about to flood into the job market, and start competing with 2009 graduates who are still searching
for jobs.

Normally I would say it is better not to take a loan, so you are not paying interest to anyone else. But in this case perhaps you should use "other peoples money", and keep your cash in reserve for an emergency. 3.99% is a good rate for a car loan.

Rugel

I couldn't agree more!!

ac-n-up

very good advice and 3.99% is hella good in this day and time.....

PaulNY

3.99 is a ton better than I got when I picked up my TL, it was 6.x%...but you'd also have to figure how much that $10k would earn in interest over the next 48months as well...if you're lucky, you're making .5% interest on the money? It's a total judgment call for you...if I had the money at the time, I would have paid off the TL in full like I did my previous Accords

Hapa DC5

Pay it in full and keep it 6-8 years, forget paying the bank.

Aman

Keep your trade-in until you've got a steady flow of income before spending this much money on something. A $7k trade-in will do you perfectly fine during the summer months, until you get a job.

Personally, I'd invest that money in an appreciating asset (i.e. a house), but it's your money. If you do buy the car though, I'd say just pay cash. I'm not good with loans, but at the end of the day, you'll be paying more money for the same thing.

Good luck with your decision.

Pete2010

I paid down about 17k on my 4G TL, and then financed the rest at 4% when I bought it last year. I manage my own investments, and I know I can make more than 4% on the cash that I'm investing.

But I'm still pretty liquid, so if I needed to pay it off at some time I could if things changed. If you don't have a job, don't fall under debt, you'll be screwed, and then using your emergency fund to pay a car payment.

Pseudomaniac

iTrader: (1)

If your 30K is earning more than 4% - then finance it, if it's not - why hold the debt?

FAST4DR

There are several ways to look at this and no one has a perfect right answer.

1. The smart thing to do of course would be to keep driving your paid for car and invest your money into something making money or keep saving it for a nice downpayment on a house someday, etc.

2. You could wait until you get a decent paying job, so that you do not have to touch any of your savings.

3. If you decide to use $10k out of your savings, once you get a job, pay yourself back in payments out of the salary, like you are paying a bank, until you pay the 10k back.

I personally would look at it like this.... You only live once, you've worked your butt off to make it through college, you have more money saved that the majority of people your age, your dad is willing to put a good chunk of money down to help out. I would take the $10k out of savings and pay cash for the car. You will have a pretty much new car, that is paid for, safe, most likely maintenance free and you will have the pride of driving a nice car that makes you feel good and makes a nice impression. I would still make it a point of trying to pay yourself back just like you would a bank.

brassai

But don't neglect your credit score!!!!!

Get a copy of all three... if you're above 550 or 600 on all three, pay for the car outright. If not, buy the score up to 600+.

If you don't have a credit score to back you up, you won't be able to buy a house down the road... the fact that you're being offered 3.9% says you have a "ok" score but not a great one. If You can use some of this cash to buy up your score, it'll do you well in the long run.

Also remember to make the car price and the financing SEPERATE negotiations. Acura is offering .9% these days for solid credit. Base your initial negotiations on the car and the car alone.. tell them you don't care about financing number or paynents... just totak cost. Then once you reach a good price on total cost, then you look at the sales consultant and say:"So... Acura is offering .9% financing. let's talk". Makes for a grueling day for you so go in rested and prepared but it's the best way to negotiate price. Remember that you'll ultimately be paying MORE for financing the car, a keep that in the back of your mind. I did this a few months ago and while I did have the cash to pay, I ended up with 1.3% (I don't have the greatest of credit) and a couple of extra thousand knocked off the price.

Cheers,
D.