Pay cash vs. Save up vs. Car Loan

Brother · 03-28-2009, 02:34 PM

How many of you have paid all cash because you had it or saved up, and how many took a loan? How long did it take you to save?

I've decided after much wrestling to save up instead of taking a loan. It is going to hurt, but I'm sure it will be worth it in the end.

GrandmaSideways · 03-28-2009, 03:24 PM

Well I spent a year on my last car watching the market carefully, test driving cars, looking for the right car, and saving up cash.
Then the right car popped up for sale in Oregon - A whole country away. Lots of research and a quick attempt to dump what I was driving then (which worked out well actually)
Anyways it's up to you. I don't like owing money on cars to the bank, personally - but that's how I cam. I also don't lease.

gestalt1 · 03-28-2009, 03:29 PM

i think in the long run saving and paying cash is cheaper. but, you need to keep the car for 5+ years for this to work. one problem is that the depreciation loss of a new car becomes extra maintenece cost of a 5+ year old car. if you buy and maintain properly you will be ahead because you save the interest on the loan and the sales tax paid every time you buy a car. typically automakers that offer 0% financing don't offer other discounts you would get if you were paying cash or normal financing. leasing vs financing ends up being a wash also.

geshaghi · geshaghi's Garage

If I'm buying a toy (which I would generally describe as a car that provides anything beyond basic transportation and other practical needs), I pay cash. While I can see an argument that a Porsche could be your basic transportation car, and this has certainly been the case for me, there is still a toy factor that exceeds my needs, and I really prefer to pay for this fun factor up front.

ossiblue · 03-28-2009, 04:04 PM

If we're talking P cars here, and I think we are, then it's save up and pay cash for me. Like the others, it took a while to buy all of the cars I wound up with and during that time I continued to save and planned ahead to sell whatever current car needed to be desposed of.
The only exception I would add is to have a line of credit available so when that exact car you have been looking for pops up, you can jump on it without delay. Then, you can liquidate what ever car you need to repay your credit line and continue to pay the credit line which, currently, can have very low interest. I used this method for only a small amount to meet the difference between what I had saved and what I needed. Don't regret it.
In this market, the longer you shop the better the prices tend to be, which is the reverse of a year ago. The frenzy to buy a car before it's out of reach is no longer there so saving toward a purchase is a bit easier. Like the others, I never lease and have only taken out a partial loan on two cars in forty+ years.

aigel · aigel's Garage

I recommend paying cash - especially in this economy, where you may find yourself jobless down the road. No fixed costs aside from insurance, registration and maintenance are a good idea. If worst comes to worse you can cancel insurance and registration and mothball the car until you have money again. Or if you need to raise cash, you can sell the car.

I have had good luck buying cheaper cars, driving those for a while, fixing them up and then selling them again for a nicer one. My 993 is the product of a whole chain of probably 15 cars over 8 years.

Just my two cents (in cash),

George

WERK I · WERK I's Garage

Quote:

Originally Posted by Brother

How many of you have paid all cash because you had it or saved up, and how many took a loan? How long did it take you to save?

I've decided after much wrestling to save up instead of taking a loan. It is going to hurt, but I'm sure it will be worth it in the end.

Kind of vague in what type of car you are purchasing......but anyway here goes. If it's a new car, a lot of car makers are offering unbelievably low interest rates (some as low as 0%). In this case, it's kind of hard not to take a loan out on the car. In this manner you car invest your hard-earned cash elsewhere to get greater return while you make your monthly payments. If the interest rates run higher, you may want to put as much cash down as possible or all cash. Make your money work for you.

Brother · 03-29-2009, 07:44 AM

I'm considering an 87-89 carrera or possibly a 964/993, but I'll probably stay with the carreras. I would want one a near perfect leakdown or a top end rebuild. I think this is possible for around 15-20 right now. The guys still asking 24 are smoking the good stuff. I really have no possibility of loosing my job unless I get killed or lose my mental faculties. In fact, I just got a promotion.

I'm saving up. I really expected this to be a bunch of people saying "take a loan and have fun", but this is a cool surprise. Well, maybe in a year or two I'll have my next Porsche.

Cal44 · Cal44's Garage

Owe no man

aigel · aigel's Garage

Quote:

Originally Posted by WERK-I

Kind of vague in what type of car you are purchasing......but anyway here goes. If it's a new car, a lot of car makers are offering unbelievably low interest rates (some as low as 0%).

Usually if there is a 0% finance offer, there also is a very high cash back offer. I have never seen 0% financing where the cash price was identical to the financed price.

George

georgeinhere · 03-29-2009, 09:53 AM

I am not so sure that paying cash makes any sense whatsoever. Check out penfed.org, they'll lend you 100% nada value at 3.99%. Take that loan and invest/save your money! If you think in terms of being unemployed...you shouldn't be buying toys but even if you decided to do it nonetheless, a Porsche isn't liquid, stocks and money in the bank are ;-)
Another thing is that we're not going to see interest rates as they are forever and we'll see inflation in the near future...if inflation comes in then your cash isn't worth what it used to be and in exchange interest rates will...Econ 101! My .02cents, YMMV.

aigel · aigel's Garage

This being a DIY board, most people are pretty conservative with their money. Sounds like you are buying a toy. The rule of "cash only for toys" applies here. You know that if the engine blows in your 16k Carrera, you have a 6k Carrera - not something you want to experience on a car you owe on.

I recommend going with a mid year or SC to get started. Drive it and fix it while you drive, then sell when you saved some more and buy a 993 or a very nice late 3.2 Carrera.

George

georgeinhere · 03-29-2009, 10:00 AM

Even DIY should look at money as a tool, not necessarily as paper bills that can reside in your pocket. I agree with Aigel in terms that you should be able to write a check for toys but that doesn't necessarily mean that you should write it...only that you should be able to do it. Now I'm confused.

onboost · 03-29-2009, 11:16 AM

Quote:

Originally Posted by Cal44

Owe no man

Agreed.. I have the title to each and every..

If it's some late model luxo-barge for the other half.. then maybe a note, unless I can talk here in to one that's five years old! Cash is king baby!

Brother · 03-29-2009, 03:04 PM

Quote:

Originally Posted by aigel

This being a DIY board, most people are pretty conservative with their money. Sounds like you are buying a toy. The rule of "cash only for toys" applies here. You know that if the engine blows in your 16k Carrera, you have a 6k Carrera - not something you want to experience on a car you owe on.

I recommend going with a mid year or SC to get started. Drive it and fix it while you drive, then sell when you saved some more and buy a 993 or a very nice late 3.2 Carrera.

George

No thanks on the midyear. The SC's are okay, but no thanks to the CIS. If I had a G50, then the wife could drive it and that is one less grenade to worry about. I'll save up for the 87-89 Coupe that I really want this time. Just like the signature block shows, I've had an SC and a 914 before so this isn't my first P-Car.