how much cash should I put down for a car?

**PrincessPerky** · 09-04-2008, 09:37 AM

I would buy it outright, then put 200 back into the EF till it is back to your comfort level. because you would still have an EF, and well truthfully you are not all that likely to need all 9k right away. (though your job situation might be different, maybe you have a higher likely hood of needing it)

Anyway, if I needed a car and had that in savings I would just buy it.

**Caoineag** · 09-04-2008, 10:54 AM

I would vote for paying in full. The amount you save in interest and fees would definitely make it worthwhile. I see commercials all the time for 0% interest auto loans but the fine print mentions that the fee per $1000 financed so even those deals don't tend to be very good.

Just make sure to replenish your savings.

**anonymous_saver** · 09-04-2008, 11:14 AM

Definitely buy it outright!!! You have the cash, like the other poster said, just put extra money towards your emergency fund each month to build it up back to that $9,000 level. If you bought a $12k car, you would still have $6,500 (which would be just over 4 months worth of an emergency fund).

I think you can do this without getting debt!

Where do you have your IRA by the way? Are you contributing to your employers match in your retirmeent account? Do you have other debt?

**StepRightUp** · 09-04-2008, 11:23 AM

i have student loan debt - about $300 per month automatically taken from my checking each month.

no credit card debt

I contribute $300 each month to my Fidelity Roth IRA

my employer doesn't offer a 401k

thanks for the advice - i'm seeing the wisdom of paying in cash. I'm having trouble with psychological effect of gutting my savings so much. But I'll get over it if it's the best way to go.

thanks for the advice, people!

**Merch** · 09-04-2008, 12:37 PM

"I'm having trouble with psychological effect of gutting my savings so much."

Very wise words. Maybe you could buy a lesser car. Instead of 10-12 maybe 5-6. I work in Boston and used to live in Brookline. I only needed a car every now and then. Probaly like once every week or 2.

If you park on the street, you probably want a car you don't mind getting dinged or scratched. Just a thought.

Also with no debt, you should be thinking of your other goals like paying of the student loan and saving for a condo or house. Just some additional thoughts.

**disneysteve** · 09-04-2008, 12:38 PM

Originally posted by StepRightUp View Post

I'm looking at getting a used car in the $10K-$12K range, maybe $13K.

i'm seeing the wisdom of paying in cash. I'm having trouble with psychological effect of gutting my savings so much. But I'll get over it if it's the best way to go.

Another vote for paying cash.

I would definitely make $10,000 the maximum you spend, though. Don't let it drift a penny higher. Make that a firm number. I don't know what type of car you need, but there are lots of quality used cars available under 10K. I'm sure some here will think 10K is way too high of a spending limit.

**StepRightUp** · 09-04-2008, 12:43 PM

good point, merch

**tripods68** · 09-04-2008, 03:35 PM

You can even buy a car lower than 10K. I paid $3K cash 2 1/2 years ago on my 95 Altima. It's still drive fully well and functional with 95K on it.

**kork13** · 09-04-2008, 03:42 PM

one way you could look at it.... buy the car outright, but figure out how much your monthly payments would have been had you financed it all. Make those "payments" back into your EF each month. In the end, you've basically taken out a loan from yourself, and you're all the better off for doing it. ...just a thought.

**maat55** · 09-04-2008, 03:43 PM

Originally posted by StepRightUp View Post

i have student loan debt - about $300 per month automatically taken from my checking each month.

no credit card debt

I contribute $300 each month to my Fidelity Roth IRA

my employer doesn't offer a 401k

thanks for the advice - i'm seeing the wisdom of paying in cash. I'm having trouble with psychological effect of gutting my savings so much. But I'll get over it if it's the best way to go.

thanks for the advice, people!

This is the approach you should have to buying anything. Why is it easier to spend 12k when borrowing, but not when paying cash? This is why Dave Ramsey say's that personal finance is 20% knowledge and 80% behavior.

It's my belief that, If 100 people saved 12k cash to buy a car, 75% or more would pay 10k or less. But if they were to go car shopping with the plan to finance a 12k car, they would spend more than 12k.

Always pay cash. Then rebuild your EF. After you have finished your EF you should save cash for your next car.

**StepRightUp** · 09-04-2008, 03:47 PM

these are great perspectives and are making me look at it in a whole new light - thanks guys!

**disneysteve** · 09-04-2008, 03:51 PM

Originally posted by StepRightUp View Post

My cap for a car payment is $200/month.

Originally posted by maat55 View Post

Why is it easier to spend 12k when borrowing, but not when paying cash?

Good point, maat. The problem is people do exactly what OP did - they think in terms of what monthly payment they can handle rather than in terms of how much they can afford to spend. If they can afford a $200 payment, they often don't care if that is for 3 years or 4 or 7, as long as it isn't over $200/month.

Someone I know said this not long ago. She has a car that is 2- 3 years old. She is still making payments. I'm not sure but let's assume she has a 5-year loan (could be longer). One day, she mentioned that she had looked at a new model that she really liked and was considering it because she could get it and keep her payments the same. I, of course, pointed out that though the payment may be the same, she'd be making that payment for several additional years. If she kept her current car, in 2-3 years she'd pay off her loan and have NO payments for the remainder of time she kept her car.

**gekkoplus** · 09-04-2008, 09:19 PM

In Boston, I always rode T. I only needed car for groceries for which I used to share cab with my friends.

I really miss the ease of public transportation in Boston here in Cali.

**Well Spent** · 09-05-2008, 09:00 AM

Are you sure you really need one living there? Could you join Zip Car and also use the T?

If you need one, I agree with paying cash in full out of your savings.

how much cash should I put down for a car?