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Should I take out a loan or pay with cash?
- Thread starter AngularC#
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Shelburne
Member
Only you can answer that question. We paid cash for our 2020 M3LR - about $54,000 with taxes, etc. We based our decision on the fact that the money we used was earning very little interest at the time, and the interest on a car loan was higher. Why pay to use someone else's money if you can afford to use your own?
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The decision has nothing to do with the car. Specifics matter, but generally a 54k loan at 4% for 4 years will cost you ~$4.5k over those 4 years.
- can you invest that 54k and make more than $4.5k in that same 4years?
- can you absorb losing 1/2 your savings over those 4 years? IE, any other big purchases or investments such as real estate coming up in that 4 years?
- can you invest that 54k and make more than $4.5k in that same 4years?
- can you absorb losing 1/2 your savings over those 4 years? IE, any other big purchases or investments such as real estate coming up in that 4 years?
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Paying cash is guaranteed interest ($) saved. Investing the money is no guarantee, and the pain in the markets is nowhere near over.
Buying a house? You may or may not need the cash - but the amount of credit extended could limit the purchase. The housing market may start a freefall, so if you were thinking of a house it'll be a buyers market soon (unlike depreciating cars).
Living debt free is complete freedom, although not as easy as it seems. Digging holes early makes that much, much more difficult.
Buying a house? You may or may not need the cash - but the amount of credit extended could limit the purchase. The housing market may start a freefall, so if you were thinking of a house it'll be a buyers market soon (unlike depreciating cars).
Living debt free is complete freedom, although not as easy as it seems. Digging holes early makes that much, much more difficult.
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How are you getting to 54k on a RWD? Can you go without Enhanced Autopilot and have them turn it on later (presumably at the same price)?
Can you wait the four months until 2023, at which point the EV tax credit SHOULD apply, even at 54k. That's a cool 7.5k off the top, and probably even justifies lots of Ubers or rental cars until 2023.
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you probably shouldn't drive a $54k vehicle when you make $85k / year... savings are super important and congrats on having already saved $100k. I would definitely not advise to cut your savings in 1/2 with a (usually) depreciating asset or take out a very high interest loan. Plenty of EVs can be had for less or get a ICE vehicle until prices have normalized.
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*NOT* if you make $85k a year... jeeze... recommending a $65k vehicle plus tax (once you add FSD) for someone making $85k / year. that's a super unhealthy ratio...
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While interest rates are much higher than they were, they're not onerous. Also, the market has fallen a tremendous amount, and if you're young, this is the time to invest. Can your investments beat the interest rate you'd be paying? For me, it's a no-brainer, borrow for the car, and invest the cash. To be honest, at your income level, I'd consider something cheaper. If you don't take long roadtrips, I'd think about a Bolt. Save more to put in the market
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HeatproofGenie
Member
EVs surely save money on transportation costs long term but at that savings level and income I'd highly also recommend a cheaper car. Bolt for next year with tax credit is your answer although you might not want to hear that.
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Bolt / ID.4 etc... all more reasonable on the wallet. and the ID.4 range = Model 3 RWD range
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Im reasonably certain that the post from @UncertainTimes was a sarcastic one. I also dont take posts like the one from this OP too seriously since its another in a line of:
"brand new poster who created an account to make this post on a fairly controversial topic ("should I pay cash for this 60k car when I make 85k a year?") designed to "get conversation going". Where the poster creates an account to make the post, but doesnt actually log back in to check on the thread they started.
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This is considered a controversial topic lol? You act like I've abandoned the thread for a week. It's only been half a day. Chill out, mod.
Anyway, I've decided to wait and see if any part of the new ev tax credit will apply before purchasing.
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"give me financial advice on purchasing a 60k car when I make 85k a year" is a type of topic that always draws lots of discussion about financial responsibility, etc etc, so, yeah actually.
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It's actually about buying a 54k car (rounded up without tax credit) with 100k in savings on top of the aforemetioned salary, so no, not really.
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puffdaddy
Member
Can you afford the payments on a 4-5 year note? If so, how disciplined are you? Pay cash to save the interest and have the peace of mind of not having a payment. Put the equivalent of the payment in savings/investing every month. If not, you shouldn't consider it since it would take more than 4-5 years to rebuild the original amount.
Do you have any long-term investments for retirement? If the $100K is all you have NO WAY you should take from it
PS: internet car forums aren't the best place for investment advice, mine included
Do you have any long-term investments for retirement? If the $100K is all you have NO WAY you should take from it
PS: internet car forums aren't the best place for investment advice, mine included
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Do you have a car now? Is it a wants or needs? How long you plan to keep the car? Spending half of your life savings on a depreciating car is a lot ... Cash in your pocket is king, I will avoid buying new or used car unnecessarily especially at this time. Interesting thing is millionaires drive simple and cheap car.
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