Today TaxMama hears from Bobbie in Highland Park, IL who asks, “Should you finance, lease or buy a car with cash?”
Hi Bobby,
Personally, I always prefer to buy a car rather than lease.
But here’s an analysis so you can decide for yourself.
https://www.taxmama.com/Articles/rentvbuy.html
This page is being updated this week for my new column on buying cars on Military.com
As to financing vs paying cash – it all depends on the loan rate you can get. And what you could earn on the cash if you invest it.
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These days, you can get pretty good financing deals from both the dealer (as low as 0%) and your credit union. (Banks usually have the highest rate.)
Or you might get away financing the car for 0% on your own. For instance, we bought my husband’s last truck using money from a credit card. We had 0% interest for about 12 months and made sure to pay it before the 12 months ended. Although, we could just as easily gotten another 12-15 months by accepting another 0% offer.
So the loan cost us nothing.
See if you can get free money – and I am seeing loans on credit cards for about 15 months.
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In fact, here are two of them: https://www.cardoffers.com/partners/links/cpa/all.asp?tempid=339850
Then, invest the money you would have used to pay cash in something that pays you a higher rate of interest. Perhaps a REIT (real estate investment trust)?
http://wsbarberschool.com/wp-content/languages/new/write-a-scientific-paper.html
They are paying about 7% or so.
http://wsbarberschool.com/wp-content/languages/new/get-paid-to-write-papers.html
Good luck!
Remember, you’ll find answers to questions about money decisions and all kinds of tax issues, free. Where? Where else? At TaxMama.com
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- Ask TaxMama :: Where taxes are fun and answers are free
- TaxMama Article :: Lease vs Buying a Car (to be updated this week)
- TaxMama’s New Column :: Buying Cars
- TaxMama’s Credt Card Center :: 0% interest cards, with the rate good for 12 months or more
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