Pay cash or finance ??

[mutanthands]

It's easy to make money when you have money. Pretty universal!

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[TaycanHero]

It's cheap to be wealthy and expensive to be poor.

Never a truer word spoken and I will be stealing that line from you!

It is unjust, but that's just the way our debt-based economic system works.

 

[bxwatso]

I was going to pay cash for new Taycan (about 165k) given recent interest rate increase. I was able to find rates from local credit union in low 3’s. Seems foolish not to take advantage of that. Recent money market in US yields about 3% and 2 year CD’s yielding around 5%. I was thinking of putting 50-70k down and investing rest into different investment “buckets”. I’ll probably keep this car 3-4 years. Anyone in similar situation? Thoughts? I know everyone’s situation is different but just seems foolish to dump all that cash in a car. I don’t “need” the cash per se, might be nice to have extra cash on hand

Interest expense on a car loan is not tax deductible (US tax law). Interest earned on a CD is taxable. Significant note.

 

[electricsidecar]

Does this conversation change much when looking at a loan vs a lease? When I brought up paying for the car in cash vs financed, my dealer was surprised and made the case for a lease being preferential because "the dealer is able to provide some incentives" when using a lease. I'm interested in owning the car outright so a lease isn't immediately appealing to me, but the response from the dealer has gotten me wondering now.

 

[Sidicks]

Does this conversation change much when looking at a loan vs a lease? When I brought up paying for the car in cash vs financed, my dealer was surprised and made the case for a lease being preferential because "the dealer is able to provide some incentives" when using a lease. I'm interested in owning the car outright so a lease isn't immediately appealing to me, but the response from the dealer has gotten me wondering now.

It’s certainly the case that some Lease companies can buy in bulk, and pass on manufacturer’s discounts within their lease pricing.

Not sure this would apply to a Taycan.

Easy to find out though - obtain a lease quote and you’ll be able to see what the ownership cost would be over say 3 years compared to the alternative of buying the car and then selling at the end of the period.

 

[whitex]

Buddy if you don’t have a private banker giving you special rates on your assets you shouldn’t have a Taycan.

If you have a banker who will lend you money at 2% you should probably fire that banker - why lend you money if the bank could be making more than twice the profit on risk free bond investment? Either the banker is incompetent, or it's a scam (legal with fees raising the APR significantly, or illegal where you find yourself fleeced of the assets you leveraged). Perhaps you've heard this before, but in case you didn't - if something sounds too good to be true, it is too good to be true.

 

[kort]

if you car considering paying cash for the car, sometimes dealerships will offer a better price on the deal if you finance through them, as long as there is not a prepayment penalty you could finance the car through the dealership then pay it off immediately

 

[Dee]

So you are borrowing money for a depreciating asset?
Ok man...??‍

 

[Redhot2474]

Hey Marc,
Your financial dilemma from a year ago is still relevant, as these decisions can have long-term implications. It's great that you were considering the low-interest rates available for financing the Taycan and exploring investment opportunities for your cash.

I don’t regret my decision, I financed 100% of it at 4% and now getting 5.25% on a money market account I put 150k cash in. More importantly I now have cash that’s easily accessible.

 

[kort]

So you are borrowing money for a depreciating asset?
Ok man...??‍

borrowing money is the way the vast majority of people buy their cars

 

[ClemenceGinger1]

Your plan to finance part of the Taycan purchase and invest the rest sounds like a smart move, especially with those interest rates. It reminds me of when I was looking at a similar situation with a different car a few years back. I ended up doing something similar—putting down a chunk and investing the rest in different areas. It gave me flexibility and kept my options open. Considering the current money market and CD rates, it seems like a practical approach to balance enjoying the car now and making your money work for you elsewhere. If you're comfortable with the financial strategy and it aligns with your goals, it could be a win-win situation. If you're ever looking for sound legal advice or assistance, check out caddellreynolds.com—they've got a good reputation for helping people navigate complex legal issues.

 

[Havine]

If you’re getting 3% or less, take the “free” money and finance. I haven’t seen many rate offers that low. If you found one, smoke’em while you got ‘em.

If you’ve got the cash (ie. not pulling it out of investments), cash sitting in account in this inflationary environment is just sitting there losing value. Unless you’re seeing the free money interest rates, now is the time to spend cash.

I will take the free money when offered, but in this environment, my recent vehicle purchases have all been cash.

That’s a fair point. It really comes down to the spread between the loan APR and what your cash can earn in a HYSA or money market fund.

If I can land a promotional rate (especially the sub-3% deals you mentioned), it’s almost a no-brainer to finance. It’s essentially a subsidized loan when you account for inflation. But you're right—at current standard interest rates, debt is expensive, and paying cash is often the only way to avoid bleeding out on interest payments.

For me, it’s all about the math: if the cost of borrowing is higher than the conservative return I can get on the cash, I’m cutting the check and paying in full. Peace of mind from not having a monthly payment is an underrated asset, too.

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