Is Paying Cash for a Car a Good Idea?

ferrariMaybe you shouldn’t pay cash for a car?

If you have savings then it might seem to be good idea to use them to buy a car. But is it always the case?

If you can get the loan at a very low APR – which is the case at the moment. Even 2% is being talked about. Then take the case you would have used for the car and lock it away in a savings or investment account that would return substantially more than the cost of the loan.

But what about the risk? If the investment goes sour then it all falls apart.

Maybe pay off the mortgage with the cash and take the low interest car loan?

I think it depends on the exact terms of the car loan. These things can have nasty clauses in them that can come back to bite you. Buyer beware, but worth a thought or two.

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