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Pay for a car in full, or do monthly payments?

I weighed my options to either pay for a car in full, or pay a certain amount and pay off the rest via payments. Which would be better?
Viper · M
Depends on the interest they're asking for...

If it's 0% Interest for not extra cost for a certain period I'd take that, because

1) It's 0% interest, and if there are no hidden fees attached it's not costing you anything. [i][u]But need to look for those hidden fees first.[/u][/i]

2) In theory keeping your money in your bank account longer will keep giving you interest longer and a gain more, those interest rates for some banks are quite low.

3) Having it could really help your credit (if you can afford not and pay it off on time), helps your credit score having a big ticket item that you're paying off on time. Of course, the opposite could be true, if you can't afford it or miss payments and don't pay it off.
JoeyFoxx · 51-55, M
Depends on the interest rate and what you can afford and what you may need the money for in the next few years. If it’s above 3.5%, generally better to pay up front. But...

Spreading it out gives you more options for other purchases.

Is your earning potential going up soon?
Lilymoon · 46-50, F
[@802348,JoeyFoxx] blah blah blah 🤭
JoeyFoxx · 51-55, M
[@1141547,Lillymoon] right?

I should stick to talking to myself
SageWanderer · 70-79, M
Depends on the interest rate. Cheap rate use their money, high rates use yours.
Adogslife · 61-69, M
Technically you can do both. The object of credit is to continue to use it for your advantage. If your cash rich but fail to use credit, your score can drop horribly.

So, the solution is to take a loan, let’s say $20k. The first month pay off the vast majority of the note. Let’s say $18k. Now you’ve safeguarded yourself against interest charges. The remaining $2,000, just make your required monthly payments. You’ll have the note paid off in six months. Your credit will improve because you’ve shown the ability to borrow any pay off a large note. And, your interest paid will be incredibly nominal.
How long (years) would you be paying for the monthly payments?

If it’s longer then you would keep the car...pay in full
Brickbybrick · 26-30, F
In full if you can. Don't they charge more if you pay in installments?
Dan88411 · 31-35, M
[@1089099,Brickbybrick] Do they? Either way I will probably try and do some negotiating to try and and get a deal.
Brickbybrick · 26-30, F
[@940086,Dan88411] yes as Viper and Joeyfox have stated, look out for the various charges and make everything crystal clear before you sign anything.
Lilymoon · 46-50, F
Pay in full if you can ... that way you don't have to worry about monthly payments.
DropTopDig · M
Idk how much they want for the car, but if it were me I'd put 50% down & finance the rest unless the interest rate was too high. Put the other half of the money in your "rainy day fund". Besides you don't want to pay a car off right away. Dealerships (reputable) give a year warranty so if it's a lemon you have legal recourse.
saintsong · 36-40, F
Get it out of the way pay in full if you can!
iamnikki · 26-30, F
Make payments if the car is more than 5k. What if you pay 20k upfront, then total it next month...
Adogslife · 61-69, M
[@467302,iamnikki] If you total your car, the insurance company is responsible for replacing it with one of equal value.

Your risk is paying for a note for a long time. Initially, the car depreciates faster than you can pay it off. The insurance proceeds from a total loss could be less than you owe on the car. Then, the insurance company gives the cash to the lien holder, and you still owe the remainder of the unpaid loan balance. If this scenario is a concern of yours, you can purchase “gap” insurance. It will payoff any outstanding loan balance in the case of a total loss.
Stereoguy · 56-60, M
[@397348,Adogslife] Exactly!
Dan88411 · 31-35, M
[@467302,iamnikki] [@78387,Stereoguy] I also prefer to buy used.
Depends on how your budget would be affected.
If paying the full amount would mean cornflakes and peanut butter sammiches everyday for the next few months, well...🤔
Dan88411 · 31-35, M
[@328496,bijouxbroussard] Well the car that I want is about $5300. By next weekend when I do car shopping, I'll have around $8200 in my bank account. So even if I pay in full, I'll have around $2900 left in the bank.
[@940086,Dan88411] That sounds workable. The upside of no payments is no [b]interest[/b], too.
Synyster · 46-50, M
You buyout assets not liabilities. A car is a liability. I would spend my money paying a house down to own it and it's equity.
Cars have no equity unless it's antique.

Find the best rate and finance it.
Stereoguy · 56-60, M
If you can pay it in full that is best. If they are offering 0% interest they payments are okay and let your money work for you. If you have to pay interest then just pay it in full.
TheCoolestCat · 31-35, M
lets face it its gonna break down at some point just buy a scrapper thatll do ya a year, kinda works out cheaper
Iwillwait · M
Your Tax advisor may say to make payments if your investing the remaining portion.
tiggerandariel13 · 41-45, M
I always pay cash for my cars I always have the money saved
NotJamieM · 46-50, M
If you can get a zero interest loan, do the installments.
NCCindy · 31-35, F
I've always paid in full.
SW User
In full.
Dan88411 · 31-35, M
Thanks for the advice, everyone.

 
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