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Thread: Is credit better than cash

  1. #1
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    Is credit better than cash

    DH & I have been saving for a newer car. Just got a great buy (Fiat) on one we could pay cash for. No deal for cash but if we financed we could have our choice ( managers special) of a lawn mower, BBQ or power washer. LOL. Didn't need any of those.
    True4uca

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    What is the interest rate? If it is more than 0%, do the math. It may be cheaper to purchase your own BBQ or power washer.

  3. #3
    Super Member thequilteddove's Avatar
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    I would find out if there was a penalty for early payment on the loan and how long you had to maintain the loan before you could pay the balance... Some places make you keep a loan for a minimum of a year before you can pay it off w/o a penalty. If that's the case figure out how much it would cost you in interest - you may find you can by one of those three items for less on your own... just a thought. If there's no penalty, grab the deal and then pay it off as soon as possible *grins*

  4. #4
    Super Member JenniePenny's Avatar
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    Cash is always better than credit for the consumer. The freebies aren't "free" - they are built into the payments somehow (interest).
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  5. #5
    Super Member IrelandDragonQuilting's Avatar
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    As Dave Ramsey would say "Cash talks" I just recently lost my job and company vehicle, so I went on the hunt for a personal vehicle, I went to tons of dealers, now i was not looking 'brand new' but something used in good condition. I found that the larger dealers would not deal, but the smaller dealers and some a few miles away were more then happy to discuss cash with me. Dealers get kick backs by having people finance, and leasing is the worse. Go check out www.daveramsey.com you cannot go wrong with his advice
    Resolve to be thyself, and know, that he who finds himself, loses his misery. Mathew Arnold 'Self-Dependence' 1822-1888

  6. #6
    Super Member Peckish's Avatar
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    Credit IS better than cash - for the dealer!!! They make soooo much more money if you finance through them. We recently shopped for a car and some of the dealers actually became quite hostile when they discovered we already had our financing set up through our credit union. Oh, and DO NOT tell them you already have financing until after you've agreed on a price and have it in writing.

  7. #7
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    Quote Originally Posted by JenniePenny View Post
    Cash is always better than credit for the consumer. The freebies aren't "free" - they are built into the payments somehow (interest).
    This is also DH's thinking as well. This was a bigger dealer & I really got the impression they really preferred credit ( think kickback to them).
    True4uca

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    Power Poster lynnie's Avatar
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    years ago, I sold cars. being new to the dealing, I thought cash was better you see, the sales person whos selling would get a cut of the financing. I could sell the car and make no commission because I sold it 100 over list, and still turn a commission of 200-500 off the credit part of the deal, the loan that was sold to you.. I soon found out that I would prefer my customers to pay by credit.

  9. #9
    Super Member Sandygirl's Avatar
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    Pay cash. But having just purchased a new van, YESTERDAY, I cant pay cash so I took out a loan. This is my second car from this dealer and after crunching the numbers, I feel that I was treated fairly vs. the quotes from other dealers that I have not bought from. Chek out Kelly Blue book and Endmonds for pricing and "true" car values. I spent the last few weeks comparing and pricing vehicles, crunching numbers with the online calculators etc. go to the dealer informed and prepared. Look at AutoTrader to see comparable vehicle pricing too.

    Exhausting but worth it.

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  10. #10
    Super Member alleyoop1's Avatar
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    My DH and I faced a similar problem a few years back. We financed the car and then after paying one payment, we paid the entire not off. It boosted our credit (which was already good) and we got the special offer. This was suggested by the car salesman.

  11. #11
    Super Member DebbE's Avatar
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    Years ago, I used to be a loan officer and did car loans at a credit union for members. I would walk people through what to do and NOT to do when looking at cars, and then explain how financing goes at a dealership. They 'shop' your loan to a variety of lenders, who offer 12-15 different options....many of which have higher rates and 'rebates' to the dealership. Of course the dealership isn't going to offer you the lower rates, they give you one of the higher ones so they get the rebate on the financing. Cash is the absolute best from the consumer point of view. Haven't paid interest on a car in many years -- I have other uses for my money!

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    Quote Originally Posted by Peckish View Post
    Credit IS better than cash - for the dealer!!! They make soooo much more money if you finance through them. We recently shopped for a car and some of the dealers actually became quite hostile when they discovered we already had our financing set up through our credit union. Oh, and DO NOT tell them you already have financing until after you've agreed on a price and have it in writing.
    amen to that...we had company car plan and was the dealer upset when we used it. We saved $6,000.00 on the vehicle.

  13. #13
    Super Member Chasing Hawk's Avatar
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    A car salesman wouldn't even deal with me because I wasn't in debt up to my chin with credit cards. He told me I had no paper trail to follow....I told him I was saving the trees by having a paper trail. ....LOL

    I even explained to him I was just starting my company and I didn't need another payment in the out going expense box at the end of the month. Uncle Sam and the state already had their hand out I didn't need their hand crowding in. He still said no. So I went across the street and they were more than happy to deal with me.
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  14. #14
    Power Poster solstice3's Avatar
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    get the credit if there are no up front charges. Get your "freebie" then pay it off with the cash....provided there are no penalties

  15. #15
    Super Member quiltmom04's Avatar
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    Quote Originally Posted by quilterCDN View Post
    What is the interest rate? If it is more than 0%, do the math. It may be cheaper to purchase your own BBQ or power washer.
    I agree! Some places offer 0%, but if not, then you are paying more for the car than your would if you paid cash.

  16. #16
    Super Member catmcclure's Avatar
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    Quote Originally Posted by true4uca View Post
    DH & I have been saving for a newer car. Just got a great buy (Fiat) on one we could pay cash for. No deal for cash but if we financed we could have our choice ( managers special) of a lawn mower, BBQ or power washer. LOL. Didn't need any of those.
    Is there a charge for paying off the loan early? What are the finance charges? If you can pay it off early and the finance charges are less than the freebies, finance and pay off next month. If the finance charges equal cost of "freebies" then it's a no-brainer.

  17. #17
    Super Member caspharm's Avatar
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    Quote Originally Posted by catmcclure View Post
    Is there a charge for paying off the loan early? What are the finance charges? If you can pay it off early and the finance charges are less than the freebies, finance and pay off next month. If the finance charges equal cost of "freebies" then it's a no-brainer.

    DH and I have done both: we bought a used car on credit, then paid it off with cash within a month (no penalty) and right now, we have a no interest loan on our newest car [2 years old and we bought it new] - we debated paying it off, but it would lessen our available cash and we are paying no interest. We could still pay it off at any time.

    It depends on what is best for you and it's true: freebies are usually not free. We paid cash for a used car for our son, which included 2 years of "free" oil changes. However, the dealership makes him cool his heels for several hours and is very rude to him, so he went to Jiffy Lube. Apparently, this dealership is rude to all it's patrons, whether they buy a new or used car.

  18. #18
    Super Member IBQUILTIN's Avatar
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    We let the dealer make his best deal to be financed, then hold him to the bottom line for cash. Its kind of a ploy, but it works and you get the best deal that way

  19. #19
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    my motto is CASH-----The money you save on not paying exaggerated interest charges you could buy 2 cars CASH is always better -no lingering monthly payments Cash

  20. #20
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    Always pay cash if you can...no payments! I absolutely hate making payments on anything, so only buy cash - sort of - we use our credit card for purchases and then pay it all off at the end of the month.

    For those making payments on cars - when the car is paid off, keep making the payments, but make them to your bank account. Don't treat it like you just got a raise unless you MUST to keep a roof over your head and food in your stomach. I did that after I paid off my first new car years ago. When it came time to get a new car (old car was aged 10+ years), I had the money in the bank. And I kept making the payment into my bank account.

    Enjoy your new car!

  21. #21
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    Another issue to be aware of: We recently purchased a 2010 model car. We were planning to pay in cash (savings). Somehow the dealer talked us into financing thru them and then sold us this extended warrently. It included "benefits" like car'd be paid off if one of us died, tires replaced if damaged, paint dings fixed, etc. He quoted us the cost of each "benefit" per month. All of it sounded quite reasonable. Total of this additional package was alittle over $110.00/mo. We got home and figured out we'd be paying over $6,500 more once this was added on to the financing. None of this was nec. Car could be pd off w cash or life ins money. And $110/mo covers alot of tires and dings. Our son called them right away, shared his thoughts w them (to put it nicely) and the next morning we paid them in cash. Deal done. This must be why on buying cars, the customer has $24 hrs to change their minds.

  22. #22
    Super Member KalamaQuilts's Avatar
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    those type of 'gifts' as also taxable, just like the 1000.00 buyers check.
    Run.
    Those are really cute cars!

  23. #23
    Super Member seamstome's Avatar
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    Cash is king. I almost always buy 2 years old with either cash or if I want to stay liquid (because I am self-employed), 1/2 cash and rest home equity because home equity loans are tax deductible. Haven't had a car "loan" in a long time.

    Yes get the deal first.

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