Should I pay cash for a car or finance it?
Paying cash ties up large amounts of liquid savings that could otherwise earn a return, but financing incurs interest that often outweighs high-yield savings account rates. This leaves buyers unsure whether keeping cash for emergencies or taking a loan — even low-rate promotional offers — actually costs more over time.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
- 1Buying a cheaper used car instead of a new one
- 2Putting a smaller down payment and holding cash in a high-yield savings account
- 3Paying entirely in cash to avoid interest altogether
- 4putting money into a high yield savings or investing the rest
- 5adding gap insurance to cover potential negative equity
- 6taking out an auto loan
- 7shopping around for low-interest dealer financing
- 8using tax-loss harvesting to offset capital gains
- 9repairing the current car instead of buying a new one
- 10utilizing a brokerage-backed line of credit
In their words
Unedited, most upvoted first, each linked to the thread it came from.
“Plan to want to get a new vehicle as i have no debt so all my income is in a surplus. i also do have a minimum of 6 months savings for just in cases.”source ↗
“my question is, are vehicles that have 0% APR for 72 months and require 0 down a good deal? is there a reason to maybe not take it? thinking of a 2025 or 2026 toyota tacoma off-road but is there a catch for those since it goes straight to principal?”source ↗
“I have 100,000 in stocks and 12,000 in my emergency fund. I’ve been slowly saving the 5,000 for a car and planned on saving more. Im just in a quick decision situation.”source ↗
“Should I buy a new car in cash or finance it.”source ↗
“My original thought was to put 30,000 down and finance the rest.”source ↗
“On another sub the advice was to put down five and put the rest in a HYSA. But if they only pay 3 to 7 percent, arent I just paying more on the financed loan interest than gaining in the HYSA?”source ↗
Where this came up
People with this problem also raised
- 3Should I take car dealer financing for a rebate and pay it off early?
- 16Is it a smart idea to buy a new car right now?
- 2Should I sell my paid off car to invest the cash?
- 2Should I finance a phone or buy it outright?
- 4Is refinancing a car loan worth it for a longer term?
- 5Should I use my savings or take a loan for college tuition?