20 year old. Need new car. Have enough savings to buy a new car outright not sure if financing it would be a better option.
Looking to spend around 20k
Seen interest rates at around 2.95%
Should I just cop the blow and pay it all out (have enough savings to be able to still live) or finance 50/50 to ease the cash flow?
10k over a 12-month term would only be around $300 but is it worth it?
Cheers
Agreed. Or even cheaper.
Consider the cost of Insurance and Rego, Mechanical too.
As Altomic said, just save your money by buying a decent nice looking car for 10k
wow ! so you got 20k in savings and you want to blow 100% of that on car
looks like you've master the high yield investment mantra
"(have enough savings to be able to still live)"
Not sure what you didnt understand here
I second the above comments. You'll be surprised how decent value you can get if you just buy a second hand, reliable Toyota or equivalent. Cojsider a Mitsubishi 380 if you like. I remember looking at one when I was your age. Admittedly a few years old but I was getting a somewhat decent look, sedan with decent storage, Mitsubishi badge, cold AC, Decently safe, less than 70,000km, sunroof, "premium" sound, cruise control for about $7500. Though can't comment on reliability - I never ended up purchasing.
Consider rego, tires, servicing, accidents, insurance, CTP, third party property damage, roadside assistance, brake pads, timing belt, car washes, oil changes, car accessories, fuel!!! Before you know.it, will definitely add up.
Maybe consider throwing the remaining $10k into some ETF's or safe stocks, aim to purchase property within 5 years, revalue after a year, make some good $$$, then upgrade and buy a nicer car!
Well done for $20k at 20. Good milestone.
Good advice.
What sort of car do you drive ;-)
Hahaha enough of that already 🙈😂
What's your income? I'd recommend not spending more than 25% of your annual post tax income on a car.
Thank goodness Pagani recently set up shop in Australia.
I've read that their latest car costs only $6mil. Only need a post tax income of $500k a week to afford it.
They are practically giving them away
What is the point of obtaining finance if you can pay for it outright? Credit rating?
I'd never recommend going to debt to pay for a loss like a car but I guess obtaining finance and then immediately paying it all off might do some good. But you don't want to be losing money if you can help it and paying to use money aka finance is a loss.
A good way to save money on cars is purchase recent models second hand. You get the reliability and features of a new car for half the cost.
In what universe is financing a car ever a “better option”?
Depending on the finance rate, you might earn more leaving your money in the bank with a high interest savings account.
If you are a small business and the car is purchased under the business, you can claim the car loan interest as a tax deduction. So depending on what finance rate you can get and what interest rate you have on your savings account, it would be better to finance the car once you include the tax deduction.
There's lots of high interest deals at the moment for 4-6 months. Citibank currently has 3.85% interest for 6 months.
Citibank currently has 3.85% interest for 6 months.
do you mind sharing the details for it?
I just had a quick look on Citibank's website, only thing I could find was 2.85% for 4 months
thx :)
More to the point, I want to know where OP is getting a car loan at 2.95%
0% finance offers
or finance 50/50 to ease the cash flow?
But it wouldn't ease the cash flow, that would remain the same; you'd just have less in the bank.
In fact a debt would burden the cash flow since you would then have to service it.
Borrow the loan at 2.95% if you can.
Leave $20K in a high yielding savings account at 3 or 3.05%.
If interest rates fall, you have enough cash to pay the loan off immediately .
If interest rates increase, just pay the minimum amount on the loan.
The car loan will come with fees also so doubt you will be ahead
You can comfortably get a new car for 15K if you must have a new car.
The Suzuki Swift, Hyundai Accent, Honda Jazz, Mitsubish Mirage, Ford Fiesta, Toyota Yaris, Skoda Fabia, Kia Picanto, MG MG3 and the Suzuki Baleno are all about that price.
Or be smarter, get a low milage, second hand car.
Cars are a terrible investment. They are drop in price the moment you start driving them. They are terrible bang for your buck in terms of enjoyment.
If you want to spend on money on things you enjoy spend it on experiences. Spend 10K on a decent car and then spend 5K on a great holiday.
Driving can be an experience you can enjoy if you're looking at performance models :)
You're just a kid. Just pay it off in full unless your parents are well-off and can support you.
Nothing in your life is going to happen that would envisage the need for such a large pool of money for cashflow purposes. Just buy outright.
Next forum post: what car to buy outright with 15k budget?
I think Ozbargain should have a bot like reddit that automatically answers questions like these..
buy a $10,000 a car and don't waste your money.