[V8.grunt]

When paying for a new car in cash, how much of the total savings should be spent? 10% of savings? 20% of savings? 30% of savings too much?

Just curious. Not sure if I might be spending too much on this other car.

[ridin135]

I would take out a loan instead and have a nice down payment. Banks are pretty much giving money away now. But to be honest in depends on how much you have in your account. If you have 10k I wouldn't take out 5k but if you have 500k I would drop 150 np

[valbmw]

It depends on the purpose and level of addiction. If you buy a tool you take a loaner or spend a small portion of your account like maybe 10-20%, if you buy a passion then nobody knows the limit. Just look at these forged wheels worth 10k a set.

It also depends on the place where you live. Some countries have cars, gas, loans and taxes cheap (also compared to income), another ones are totally opposite where the whole middle class family collects for a house then for a used 528 that costs almost like a new 550 in the 1st world.

Every dog has his day, though

[einbruch10]

Good rule of thumb, if you can afford a car payment and 20% down then do that. Cars depreciate so fast these days. I get a new (or at least to me) car about every 1 1/2 to 2 years, and i always sell the car for around what i paid but thats me.

[fcman]

I would never pull money out of savings to buy a car in cash, unless like ridin135 says you have a really good amount in savings. Loan rates in the US are basically 1-3% on new cars, not worth tying up cash in a depreciating asset.

[IEDEI]

Originally Posted by fcman

I would never pull money out of savings to buy a car in cash, unless like ridin135 says you have a really good amount in savings. Loan rates in the US are basically 1-3% on new cars, not worth tying up cash in a depreciated asset.

this. it's silly to spend CASH on a car.....use low interest rates to your advantage.

[tvo9]

I echo many other members already said above.
I took advance of the 1.9% interest rate, and I didn't down any penny.

[csu87]

if you arent investing your cash at all and it is just sitting in a mattress, then sure, buy the entire thing in cash.

If you are investing your cash like you should be, then if the loan rate is less than what your cash gets you, get a short loan and put 10-20% down on the car.

[Never_Enough]

Originally Posted by einbruch10

Good rule of thumb, if you can afford a car payment and 20% down then do that. Cars depreciate so fast these days. I get a new (or at least to me) car about every 1 1/2 to 2 years, and i always sell the car for around what i paid but thats me.

Better off keeping that 20% in the bank making $ for you.

[focal]

know what you can afford in monthly payments (cash flow). Then factor in all the opportunity costs (what you average in investment income - not stock market gambling), interest payments to take a loan and even considering a lease

cash flow - I can afford to pay out this monthly. Will help determine the down deposit needed.
opportunity costs - this is what I make monthly in dividends/interest
interest - the cost to borrow money
lease rate - sometimes the lease interest rate is less than financing. keep a lump sum to buy out the residual at the end of lease.

Another option is the ONE PAYMENT lease - the rate is even less and you don't have to pay out the whole car. Improves cash flow but there is still a lump sum to pay. The good thing is you can put away cash monthly, make investment income on that savings.

Lease or one payment lease is only if you are diligent to save or not to spend the improved cash flow. You still have to pay for the residual at the end.