Was having a discussion with the finance manager at the dealership and told him I was thinking of paying cash for the new car ($ 35k) unless he could offer a great rate (3 to 4 %)
He told me his best rate was about 6 to 7 % and asked me to consider taking a partial loan (about $20k) instead of splashing cash up front on a depreciating asset.
Fine prints : There is an application fee of $ 800 that would be added to the loan amount.
The loan is a reducible balance type.
That does not make business sense for me to take a loan and pay interest on it if I am willing to pay cash.
Any thoughts?
Probably not. Unless you are able to invest that money at over 6-7% elsewhere, don't do it. Even so you'll have to factor the $800 application fee in over the years.
Of course personal circumstances may change this, ie - are you planning on buying a house soon? If so having that extra cash to get a 20% deposit would probably be a better option. If you wanted to let us know your personal situation and what you would do with your cash if it wasn't being spent on the car, we would be able to give you a better answer :)