Cash or on Loan?

Car - the basic need - Everybody will need a car for transportation purposes. Without a car, you will not be able to go very far from one place to another place. In our country, most of the family own a car because of the poor public transport system. That is why most of the people force to have a car. With the public transport, you will need to take hours to go the destination whereas with your own car, you just need less that half an hour for the same distance. That is the different between having your own car.
@yspmyl (3435)
Malaysia
October 5, 2010 8:45pm CST
When you buy a car, how will you pay for the car? Pay it with bank loan or cash. I would prefer to pay cash and not the bank loan, to avoid to pay more for the interest. Buying car with a cash is it reasonable? Or keep the money for future or emergency use? Still thinking which is the best way to pay for a new car. What do you think?
2 people like this
8 responses
@TrvlArrngr (4045)
• United States
11 Dec 10
I hate having a car payment but my 2006 Rendezvous was giving me trouble and costing me money for 2 months. I went out the day after Thanksgiving and bought a Toyota Prius. I love it. It takes a little to get used to the plain interior compared to my fully loaded luxury car. I love that I have only filled it with gas one time since I got it home. I traded in my car and took out a loan which makes me sad. I hate making a monthly payment.
• United States
12 Dec 10
I feel like I am a slave to my mortgage and my car payment. Congratulations on getting rid of yours! Happy Holidays!
@yspmyl (3435)
• Malaysia
13 Dec 10
Yeah, at least when we do not have and loan with the bank, we feel free and we can do what ever we want to do without having to think about the money whether is enough to pay the next installment.
@yspmyl (3435)
• Malaysia
12 Dec 10
Wow! I too hate installment, I had my car and house loan installment before and I manage to settle both of it 2 years a go. At least now I am free and no need to pay bank for any installment. I love Toyota Prius, but it is very expensive in my country due to the high import tax implemented by our government to protect the local made car.
@CJscott (4187)
• Portage La Prairie, Manitoba
6 Oct 10
In the past I have used bank loans, in the future, I will save up the money I need, then invest it wisely till I have about 3 times what I need, then I will pay cash, and If I need helping investing, well they can have some of the extra, and that also takes car of the loss in value of driving the car off the lot in the first place. Sincerely and With Appreciation.
@CJscott (4187)
• Portage La Prairie, Manitoba
11 Oct 10
That is the plan...go with out, but pay the payments to a Tax Free Savings Account, and let it build, until I am ready to use it for investing, then buy my car when I have way more then I need. It will take time to save that...it takes 5-6 years for me to pay of a car in the past, so....pay ahead of time, is my plan next time. Sincerely Annd With Appreciation.
@yspmyl (3435)
• Malaysia
11 Oct 10
I think you must be earn a lot to save enough money to buy a car with cash. I think if I am rich and having extra money, I will do the same, just do not want to let the bank earn interest on the loan.
1 person likes this
@youless (112650)
• Guangzhou, China
6 Oct 10
We don't like having a load in our life. Probably we will pay for it by cash. We don't like the debit because it will be a pressure for us. If we can't afford it at the moment, we can wait for some time until we can pay for it. I love China
@yspmyl (3435)
• Malaysia
11 Oct 10
Wow! That is really nice, I think you probably from the rich family, I believe many people in China will need to borrow money from the bank from what I learn from someone. No one like to owe others people money, unless being force to. Like us in Malaysia here, when someone need to buy a car or a house, bank loan is the 1st to be consider, for a normal people with fix income will not able to pay the car or house with cash.
@Hatley (163776)
• Garden Grove, California
8 Oct 10
hi yspmyl I think if you have enough cash thats always a good way to pay as you will not have the interest rates that others have to contend with.But others may not have that money on hand.If you were wanting to build up your credit using it to pay off payments would be good to make your credit rating shine.
@yspmyl (3435)
• Malaysia
13 Oct 10
Hi Hatley, I now only have about 40% cash of the car that I wanted to buy, so it is not possible to buy it cash, but the only choice is to borrow from the bank, and pay the bank interest for the loan.
@sender621 (14893)
• United States
6 Oct 10
Paying cash for a car is so much more pleasant of a task. A loan seems to take so much more out of the purchase.
@yspmyl (3435)
• Malaysia
11 Oct 10
Yes, with a loan you probably will need to spend extra for the interest. I think if I have extra cash then I will pay with cash, so I need to rethink about that. Just in case I will need the money in the future.
@devijay78 (1573)
• India
6 Oct 10
Hi yspmyl. Why dont you do part payment in cash and take the other half or whichever part in loan? This way, you would have cash in hand for emergencies and at the same time have your car and not pay much in interest. The loan should be taken for a short term, say one or two years depending on your financial position and the amount of loan installments you can pay every month. I dont know how it is in your country but I would suggest going for a loan for a short period and not a long one. That is the way I am planning on doing for our next car. Hope this helps.
@yspmyl (3435)
• Malaysia
11 Oct 10
Yeah, that is what we normally do here, we will pay the deposit as much as possible, probably 20% to 50% of the selling price. So that the loan will not be drag for too long, and the loan can be settle within 1 or 2 years. I do thinking to do that for my new car and going to settle the loan within 2 years so that I do not need to pay so much of loan interest to the bank.
@aeiou78 (3445)
• Malaysia
6 Oct 10
When I buy a car , I prefer to pay load. The load terms should not more than 2 years. This is good to answer about the source of our income to the Income Tax Department. This is only what we practice in Malaysia. It depends on your financial capabilities. Someone needs a car to survive and to earn for living. But he/she can not afford to pay for the high monthly repayment of car loan. The only choice the finance company will approve his/her load in longer repayment period. As a result, that is the only choice for him/her to accept the terms and conditions.
@yspmyl (3435)
• Malaysia
7 Oct 10
You are quite right too, to avoid being tax by the Income Tax Department. I think this is how all the rich avoid being tax but still being able to earn so much of money but without having a high tax amount.
@johnmike7 (136)
• Philippines
6 Oct 10
Hi yspmyl! Buying in cash is always the best option! If you will pay for it in cash and you still have enough savings, then its fine. You get discounts and you always get the best deal. Just " Don't put your eggs in one basket". meaning, if you will pay for the car in cash but you don not have extra cash, your finances might suffer. However, If you finance it, you will be charged certain amount of interest depending of the number of years you will pay for it. Then, for sure, you will be asked to submit financial documents to support your loan. If you think you won't have problem with submission of documents then it's ok to apply for a bank loan. I agree with the first response, it will always depend on your financial capabilities. Goodluck! Happy driving on your new car! :)
@yspmyl (3435)
• Malaysia
7 Oct 10
I agree! If I am rich, I too will choose to pay cash for the car as this will not only save me a few thousand and I do not need to prepare so much of document for the bank loan.