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Finance or Pay Cash?

December 1st, 2015 at 12:24 pm

So as luck would have it our 2001 Suzuki SUV needs about $2,500.00 worth of repairs which happens to be the market value of the car. We our opting to buy another SUV (GMC Trex LS) bare bones but AWD. We can finance it ($20,500)at 2.99% for 72 months. This price includes a $1,250.00 GMC Educator Rebate, the trade in for the Suzuki and state tax and plates. We can pay off this car using our saving leaving us with about $5K for an emergency. We have an equity line of credit with the our bank that we can tap into if need be. What do you think, should we pay cash or finance it?

10 Responses to “Finance or Pay Cash?”

  1. Ima saver Says:

    I think I would finance it. I think a $5000 emergency fund is a bit low. You can always try and pay extra each month to pay it off early.

  2. creditcardfree Says:

    I don't like that it would only put you with $5K for an emergency. How fast could you pay off if you financed? You could also put some money down and finance the rest. Smile

  3. Livingalmostlarge Says:

    Why not finance for a shorter period and pay it back faster?

  4. MonkeyMama Says:

    Plan B - I wouldn't finance a vehicle and I wouldn't drain my cash that low.

    (I don't think it honestly makes a huge difference in the grand scheme of things, but this is the advice I give based on your wish to be debt free and to retire soon. This vehicle purchase doesn't seem to be in congruence with those goals. It's impossible to be debt free if debt is always the first solution to every problem).

  5. NJDebbie Says:

    MM, I agree and I appreciate your advice. Quite honestly we were expecting our other vehicle to last another 5 years or so. It is a major set back and we looked for a used vehicle; given the fact that my husband is mechanically inclined. In our case and with winters in NJ we need an AWD vehicle for me to get back and forth to work. Safety first and foremost.

  6. NJDebbie Says:

    We will be financing it with the intentions to gazelle intense pay it off asap.

  7. VS_ozgirl Says:

    With most of the cars I've bought I've usually paid a cash portion so that the loan repayments are lower. I wouldn't put the majority of the EF towards a car but I usually put about $5k cash in. That could be another option.

  8. Rachael777 Says:

    I assume you are buying a Chevy Trax? I could find a GMX trex. If you are. the price you are paying leads me to think you a buying a new one. Would a slightly used one of that car or some other be a better option.. and maybe put some money down and finance a smaller amount?

  9. crazyliblady Says:

    How about a used vehicle say 5 years or so old? Perhaps you could buy it with a down payment and minimal financing compared to buying a new one. That would be the way I would go.

  10. PatientSaver Says:

    Have to agree with Monkey Mama, meaning, I don't like either option.

    And I love what she said: It's impossible to be debt free if debt is always the first solution to every problem).

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