Should we pay cash or finance a $33K car at 7.89% interest?

S

swiftsharkbob

New Member
Hello. I need advice. My partner and I want to buy a used car. We have a $500 hold on it. We can put $25,000 down. The total cost is $33,000. The financing interest rate is 7.89%. A savings account offers about 4% interest. What is the best option? Any advice is welcome. I feel lost. Thank you.
 
If you put the money in the IGN account, you’ll pay:

3.9% interest per year on $250,000
7.89% on the remaining $8,000

But if you pay off the car as much as you can, you’ll only pay interest on that $8,000.

I know which one I'd pick
 
Buy a cheaper car. With cash. Then save what you'd have spent on loan payments. Like setting money aside instead of watching it vanish.
 
Here's the real deal: don't finance a car. You really don't have to, since you've got enough cash to pick up a solid used one. Getting a handle on living within your means and knowing the difference between what you need and what you want? That's step one to getting your finances in order.
 
Okay, so I might be totally off base here, but when I surprised my partner with a new car, the dealership actually asked if I wanted to put it on finance! I got talking with them, and they mentioned that most places set a minimum of like £10k for financing anything. Honestly, financing such a small amount just seemed absolutely ridiculous to me, so we ended up picking out a slightly cheaper model and just bought it outright no fuss!
 
IMB is currently offering 5.99%.
The best option really depends on what matters more for your finances right now keeping a good cash reserve or having better cash flow each week.

I always keep a cash reserve that I won’t go below, so anything extra I’d put toward the car and only borrow what’s left, with a plan to pay off as much as I comfortably can.
 
I was advised to never pay cash for anything. You should finance everything. Use their money. Pay it back, and keep your cash for investments and other things.
 
Let's be real $33k is nothing for a car in today's market, especially when a new Camry costs even more!

Stop overthinking it just finance the thing, get behind the wheel, and actually enjoy driving it for once.
 
Finance costs more than just interest. Dealer fees add $1,000–1,500. Monthly admin is about $10. Early repayment fees are hundreds. Total extra costs: $4–5k.
 
Hey, just a heads up don't just focus on interest rates, seriously. Compare the total cost and fees instead. (btw, I’m an Asset and Commercial specialist broker.)
 
Here's what you should do: pay cash for the car. Whatever your loan payments would have been each week, pay that same amount to yourself instead and throw in an extra 20%. That way, you're basically acting as your own bank.
 
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