# Auto Financing 101 - and Loans in General

**URL:** <https://forums.speedlife.net/t/auto-financing-101-and-loans-in-general/40895>\
**Category:** NYSpeed Off Topic\
**Created:** [December 28, 2007, 10:44am UTC](https://forums.speedlife.net/t/auto-financing-101-and-loans-in-general/40895 "2007-12-28T10:44:41Z")\
**Posts on this page:** 1\
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**Author:** ![Nikuk](https://yyz2.discourse-cdn.com/flex034/user_avatar/forums.speedlife.net/nikuk/32/7254_2.png) [@Nikuk](https://forums.speedlife.net/u/Nikuk)\
**Post date:** [December 28, 2007, 10:48am UTC](https://forums.speedlife.net/t/auto-financing-101-and-loans-in-general/40895/2 "2007-12-28T10:48:15Z")

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Oh, and as far as cash vs financing… **If you have to ask, then finance it.** As long as you get a somewhat competitve rate. Lets say you finance 24450 @ 7% for 60 months, pmt will be $484/mo.  
If you are saving $1200/mo now, start sending $700/mo to the car note, and keep saving that other $500.

For example:  
If you have $6k cash now, and deposit $1200/mo in an add-on CD @ 4.00% for 24 months, you’d have 36,500 (made ~$1700 in interest).

If blew that all at once on the car, it would take you 2 yrs 5 months ($1200/mo) to make that interest back. Even though it’s only $1700.

Now you spent 2yrs saving to buy, and 2.5 yrs replacing your savings, 4.5 yrs total (to the tune of $36.5k).

* * *

Whereas, if you drop the $6k now, paid $700/mo to the car (paying it off in ~3.5 yrs), and put $500 into an account @ 4% as long as you had the car loan (3.5 yrs), you’d end up with the car PIF, a well established loan on your pmt history, and have 22,500 in the bank ($1500 int earned).

If, when you pay off the car, started back to $1200/mo into that svgs… by the 4.5 yr mark You’d have roughly $38k in the bank.

Now… if you were to invest that money… 😃

```auto

Just wanted to clarify something... if you took the route of financing, paying $700 & saving $500, the interest that you pay on the loan will detract from the interest & amount saved over 4.5 years.

I would still recommend this approach based on what you've told me about your situation, solely to establish the loan & pmt history on the credit report. Well, that and it'd satisfy the instant gratification.

The only other time that I'd 100% recommend it is if your financing interest rate were LESS then your savings / investment earings % rate.

Otherwise, cash is generally king.

...Lastly, no, I don't work for a bank any longer and I cannot get / give / cosign a loan for you.

IB4MikeRi24
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