# Pay cash for a car? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 18, 2003, 9:43pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378 "2003-03-18T21:43:28Z")\ **Posts on this page:** 10\ **Page:** 2
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [March 19, 2003, 2:40pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/21 "2003-03-19T14:40:34Z")
I wonder if we don’t have a geographical issue here: **zwaldd** , I see you are in Austin. I dont know where **Lorenzo** is, but if he is on either coast he may not realie how much further nine grand can go in Texas. Or he my be in a signifigantly differnet fiancial situation than you: my parents maintain two households, and I suspect that they need more than nine K in the bank just to qualify as “not insanely risky”, let alone “prudent”. I’m just starting out and it would be crazy for my husband and I to let that much money just sit in the bank, when it could be put towards a house (which is what I’m doing, actually) or retirement (which is next on the list). I am not a finance person, but I’ve always heard that what you want is a minimum three month cushoin, six months if you have reason to believe that your income may be erratic or abruptly terminated in the next year (i.e. if you are self-employed or in an industry that is experiencing layoffs). Without knowing your monthly licing expenses, we really can’t tell you how much cash it is prudent to keep on hand. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [March 19, 2003, 2:46pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/22 "2003-03-19T14:46:27Z")
Again, I am not in any way, shape, or form a finance person, but it occurs to men that another thing you might want to think about is if you have any plans to buy a house in the near future. I don’t know what you are doing now–if you own a house, then obviously, ignore this–but if you are thinking about buying, remember that it is very, very nice to be able to put 20% down so that you don’t have to pay PMI. If you are considering buying a house, you want to keep a large amount liquid, both so you can avoid the morgage insurance and get the best rates. ---
**Author:** ![inertia](https://avatars.discourse-cdn.com/v4/letter/i/d07c76/32.png) [@inertia](https://boards.straightdope.com/u/inertia)\ **Post date:** [March 19, 2003, 3:53pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/23 "2003-03-19T15:53:28Z")
> [@](#): > > \*Originally posted by zwaldd \* > \*\*Well I don’t really need 25 grand in the bank making 1.5 percent or whatever it’s down to these days. If I had a \> $9000 cash emergency couldn’t I get a loan then? Do banks loan money at low rates for emergencies? \*\* I think the economy comments are meant to imply that you could lose your job at any time these days. I know I’m getting laid off in November. Be that as it may, if you get laid off banks will not lend you any money. So unless you’re absolutely sure you’re fine with your job situation then get a loan earlier than later. If you’re fine with the job situation however, I personally would not get a loan or you’ll be paying several hundred if not thousands of dollars in interest and “initiation” fees etc. Of course if the economy gets worse you might can pick up a used car even more cheaply when peeps start bailing out of their respective car loans etc. I’ve just ended two consecutive paragraphs with etc. Damn I did it again. ---
**Author:** ![Lorenzo](https://avatars.discourse-cdn.com/v4/letter/l/4da419/32.png) [@Lorenzo](https://boards.straightdope.com/u/Lorenzo)\ **Post date:** [March 19, 2003, 4:00pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/24 "2003-03-19T16:00:13Z")
> [@](#): > > \*Originally posted by Manda JO \* > \*\*… what you want is a minimum three month cushion, six months if you have reason to believe that your income may be erratic or abruptly terminated in the next year (i.e. if you are self-employed or in an industry that is experiencing layoffs). Without knowing your monthly living expenses, we really can’t tell you how much cash it is prudent to keep on hand. \*\* Spot on. It’s really tough giving financial advice to someone without knowing all the pertinent details, which you probably don’t want to post on a message board. Having a six months supply of expense money in the form of cash in the bank is a very good financial practice. Dropping your cash balance below this amount to avoid a 4.25% APR on an auto loan seems like a bad plan to me. ---
**Author:** ![Lorenzo](https://avatars.discourse-cdn.com/v4/letter/l/4da419/32.png) [@Lorenzo](https://boards.straightdope.com/u/Lorenzo)\ **Post date:** [March 19, 2003, 4:21pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/25 "2003-03-19T16:21:14Z")
> [@](#): > > \*Originally posted by zwaldd \* > \*\*Well I don’t really need 25 grand in the bank making 1.5 percent or whatever it’s down to these days. If I had a \> $9000 cash emergency couldn’t I get a loan then? Do banks loan money at low rates for emergencies? \*\* Regardless of the interest rate, it is good to have some readily available cash in a safe place. The typical $16,000 used car will be worth less than half of that amount in less than five years which is quite a lousy investment compared to keeping that amount in the bank for the same period of time. But if you need a car, get one that you can afford. You certainly shouldn’t spend the whole $25K on a used car. Should you spend almost 2/3rds of it? You’ll have to decide that one. Thankfully it has been many years since I have walked into my bank with “hat in hand” needing emergency cash. The only collateral I had at the time was an automobile, but after all the fees and such associated with a bank putting a lien on a car, it was actually cheaper to arrange an unsecured “signature” loan at something in the neighborhood of prime plus 9% or something like that. YMMV. As was so well stated by **inertia** , if I had been unemployed at the time it would have been mighty tricky to get any kind of a loan from a bank. Many folks in such a situation will take cash advances on credit cards which can create a pretty tough row to hoe. One does what one has to do, but better to have cash in the bank if possible and avoid such a situation. ---
**Author:** ![handy](https://avatars.discourse-cdn.com/v4/letter/h/b5a626/32.png) [@handy](https://boards.straightdope.com/u/handy)\ **Post date:** [March 19, 2003, 4:31pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/26 "2003-03-19T16:31:00Z")
Zero interest sounds nice to me. A little better than carrying $16k around in my pocket. Of course, some Zero interest furniture deals may charge you 22% back to the day you bought something if it’s not paid for in the time period they set. Are Zero interest deals on cars that way? ---
**Author:** ![In\_Conceivable](https://avatars.discourse-cdn.com/v4/letter/i/4bbf92/32.png) [@In\_Conceivable](https://boards.straightdope.com/u/In_Conceivable)\ **Post date:** [March 19, 2003, 4:41pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/27 "2003-03-19T16:41:20Z")
No handy. All the zero interest deals I have seen on cars still require montly payments. The zero interest deals on furniture are usually “no payment/no interest until some future date” deals. ---
**Author:** ![zwaldd](https://avatars.discourse-cdn.com/v4/letter/z/a9adbd/32.png) [@zwaldd](https://boards.straightdope.com/u/zwaldd)\ **Post date:** [March 19, 2003, 4:53pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/28 "2003-03-19T16:53:00Z")
> [@](#): > > \*Originally posted by Manda JO \* > \*\* Without knowing your monthly licing expenses, we really can’t tell you how much cash it is prudent to keep on hand. \*\* Not much - just a bottle of insecticide shampoo and I have a woman come by every few months to pick nits. ---
**Author:** ![whiterabbit](https://avatars.discourse-cdn.com/v4/letter/w/cab0a1/32.png) [@whiterabbit](https://boards.straightdope.com/u/whiterabbit)\ **Post date:** [March 19, 2003, 6:00pm UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/29 "2003-03-19T18:00:47Z")
> [@](#): > > \*Originally posted by Lorenzo \* > \*\*I would never recommend buying a used car for that kind of coin without having a trusted mechanic check it first. \*\* I did skip a step or two; I’m sure he got any used cars looked at. But I pulled the number out of the air; it’s been about ten years since I’ve seen the guy in question. Ten years ago, $14,000 could have gotten him a decent new car (as I remember, though I wasn’t in the market yet). I was under the impression he bought them new. ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [March 20, 2003, 3:52am UTC](https://boards.straightdope.com/t/pay-cash-for-a-car/162378/30 "2003-03-20T03:52:29Z")
A.) Yes, I may be a it better able than the average anyone to evaluate a car’s condition; B.) No deductible on the warranty - that would be a completely different picture. [Previous page](https://boards.straightdope.com/t/pay-cash-for-a-car/162378.md?page=1)