Alright, so I'm trying to plan for the future, after my deployment, and one of the things I'm planning on is getting a new car. The one I have now is fine and all, but it's a fuel inefficient wrangler, with no real space, so I'm looking to get a... regular(?) car. More specifically, a 2-series coupe (but this can certainly change). As such, I'm trying to get informed to make the best, relatively, financial decision. I know the best thing to do is buy some cheap base model, but I really enjoy driving a car, and BMW seems to have it with their 2-series.

Anyways, what I'm trying to decide is whether or not I ought to buy the vehicle out-right, which would certainly cost me 20K out-of-pocket if I buy brand new, or put down a substantial down payment, and finance. The only things I can think of that would be advantageous to financing would be having more cash in my account, less on a car(see bad investment), and I'd have more money for any investing or opportunistic ventures. Plus, I'm sure it would only help my credit score.

Now, if I buy outright, then I own the car outright. The downsides are less money in the bank (though I'll still have a good amount), I'll automatically lose money on depreciation, and I blow $20-25K with a few strokes of a pen

So, what would be the best thing to do? I don't care too much about being able to say that I completely own a vehicle, but as previously stated, I'm trying to make as good a financial decision as I can with a car purchase, in the event that I actually decide to buy a new car.

If you can swing it, pay cash. Car payments suck.

With the loan, you're not factoring in risk. If you're not comfortable paying as much in cash, buy a CPO model or something used. Having a ton of money (relative to your income) tied up in a depreciating asset is not wise, whether it's financed or not.

Sometimes the interest rates are so damn low, it doesn’t make sense to pay cash for it.  We bought my wife a Mazda SUV a few years ago and the interest rates were something ridiculous .......like .25%.

I financed it for three years, it was about a $20K car....and it literally cost me something like $50 in interest.....in total.  I hate car payments......but at that rate.....it was a no brainer.

Could you go into more detail on this? And I agree, they suck, and they feel more of an inconvenience than anything else. but the way I was looking at it was.. well, I guess it's the same either way if I was to sell the car, so scratch that. The value of the car is still the same whether I'm making payments or not.




I'm unsure what kind of rates I would get, as I really don't know how it works, plus I don't know if I would have the credit longevity to have a good enough credit score for a free-money rate.

When financing with zero percent interest be very careful that the interest isn't built into the price of the car.  In most cases, you can get a cash discount.  The only exception is when they offer incentives or rebates for financing.  I bought a truck once when Ford was offering an additional rebate if I financed the vehicle.  I accepted and then promptly paid the loan off the first month.

I can certainly ask the dealership next time I'm there, but would a dealer not be more inclined to a financed sale vs a cash one? I was under the assumption that a dealer can make more money through financing then selling the car via cash.

This ^^^ You typically pay for the interest one way or the other. Different people, different financial situations, different life-styles will ALWAYS make this a subjective issue as to which is better.

First of all, have you considered buying your car through the exchange? If you're deploying you have additional options for buying through the exchange (even as a civilian or contractor).

Second, don't automatically get it in your head that "buying with cash is the cheapest". At one time that was likely true, but as our economy has become more and more debt-based and debt-driven more and more people have figured out how to make "debt" work for them.

I recently read a LONG thread on buying a car on fatwallet (IIRC) and the old conventions are no longer true. Often times, car dealerships may not be able to make a sale at the price they need to make a profit up front. But if they can complete the sale and make their profit on the financing then it's still profit. So a trick they often use is to proudly market the 0% financing etc, you haggle over price etc, they finally drop their price down a little to make the sale, and then they come back with financing options and tell you, "unfortunately you didn't qualify for the 0% rate, but you did qualify for 3.5%". Sometimes you can even get them to go LOWER on the price once they get you to agree to the higher rate. They don't care if they make their money up-front or on the back end through the interest, it's all money to them. But to you, if/when you know you have cash to buy it, you can manipulate this, you can pay off the entire loan the first month and walk away with an even better deal than if you had paid cash.

Note: Make sure there are no payoff penalties (there generally aren't, but sometimes there are). You may also pose as somebody that doesn't have a great deal of money to get them to offer a better price with higher rate.

All that being said, I just paraphrased several pages of a thread by financial/frugal wizards into a single paragraph. I highly suggest you seek out the thread on fatwallet (I think it's a tacked thread even) and see what the experts say. It was very educational...

I'm advising you to buy "transportation" for cash only. Buy an "a" to "b" corolla / honda / 4cyl and put the rest of your money in a global equity fund. If your considering this I'll respond in more detail. But, 20k today, will be 100k when you retire in 40/50yrs, if your prudent. Thats a general statement, and just a suggestion having watched the financial systems "reset" by the FED in 09. There will be another in your lifetime. I'd also suggest money sitting in a bank as savings is not its best use either. best wishes.

Wait until after your deployment to figure it all out.  Your actual needs may be way different than you anticipate.

For what it's worth, inefficient is relative and may not mean a lot unless you have a huge regular commute - Look at your use and miles, drop in gas prices, and examine cash flow.  Plus deltas in maintenance, repairs, fuel, insurance, payments,...  

For example, in my case, I put on 50-100 miles per week max.  (It's so low that I get nice insurance discounts).  For me, the EPA "this car costs $X more to operate" statement is totally inapplicable - and even if it were, if I break down my "enjoyment" factor of being able to camp, fish, hunt, ... in my 15-18 mpg truck and give it a rough $ amount and compare it to a Prius or other more efficent vehicle, my enjoyment $ wins hands down.

As far as payments, if you can avoid them, do. When it comes to preparation for the future and investing, cash flow is king and lets you take advantage of opportunities others will miss.

Buying through the exchange was something I had never thought of, to be honest. I know there are a multitude of programs available to me, and I probably don't know of a 1/4 of them.

Your second point about buying with cash was my main concern, as, nowadays, I can't necessarily see a dealer incentivizing my purchase with cash vs. trying to make a bit more through financing and whatnot, but to continue with that, I also figured it could be advantageous to me if I financed, then paid it off as soon as I can.

I will read though that sticky.





The bimmer is a 4cyl  The price difference between the car I'm leaning towards and something like a Civic is not big enough for me to lean towards a Civic. I'm also not looking for a car to just get from A to B, as it would be cheaper to just pay off my Wrangler.

However, I still would have 20-30k sitting in my bank, and I would not mind putting it to work. I have no intentions to come back and blow my wad on partying, excessive/needless wastes, etc.., I really only want a couple guns and some new clothes, maybe upgrade my computer a bit(but I really don't need to).




Well, I'll have a lot of time to think on my hands between then, and while I'm there, so doing this at least allows me time to build ideas, consider options, and get advice.

I currently do have a regular commute of 30-40/day, and I average about 17-19 right now. Additionally, when I return, my Jeep will be out of warranty, and while I'm not worried about maint. costs after that point, it's still nice to have that safety net since a lot of the interior materials are pretty sub-par. Another reason why I'm looking at the 228i is because it's still a really fun car to drive, gets great gas mileage, and it way more practical than my Jeep is. It's also quieter, smoother, and I don't have to deal with a soft top anymore.

The last bit is another point that conflicts me.. I won't be in a position where I would troubled by automotive payments, but I also don't know if an opportunity would ever come up for me to invest 15-20k, let alone be entirely comfortable doing so.

Do not get into debt.

Just got a GT Perf Pack for 500 over invoice and a 1k incentive and 0% for 72 months.   The 2015 model year is done for with a lot of makes.   Deals are out there through a variety of dealers.

Put 17k down to drive the payments down.   Will make extra payments here or there and my yearly refund is likely to be an entire year's worth of payments.   Hate not having a pink slip in hand but this is the first new car I have ever bought and likely the last.   Should be paid off in three years.

I have lived the past 3 years with very low or no credit card debt.   Have paid off many small loans up to 10k within a year on other car purchases.   But I just didnt have the time to get my hands on 40k for an all cash purchase.   0% interest plus incentives was the only way I was doing it while buying down the monthly payments.

I hate debt but it was either do it right f-ing then or kiss the opportunity good bye and wait  a year.

Sounds like you made the smart play. Even if you had the 40k to pay the vehicle out cash it would have been wasted with a 0% for 72 months deal.



I know a few finance people and they all advocate a mortgage/car note > paying something out cash assuming you can get a low enough rate. The thing is when these type individuals advocate being in debt it isn't because its so you can blow the money on other things or let it sit idly by. Its so you can put it into the market and make more off of it in the long run. That 40k in a decent account is worth far more then whatever interest you'll be paying on a car note 9 times out of 10.



I intend on getting a new vehicle around January. Its going to be about 45-46k. Will probably put 12-15k down. Just enough to get the monthly note where I want it to be. A lot just depends on what kind of interest rate I can get this January though.

Always
Pay
Cash

to me a car is a commodity, i try to put 50% down on a car and borrow no more than 10K that way i can pay it off in no more than a couple of years

borrowing a shit load of money for transportation makes no sense, you try to baby a high priced car and before you know it in 2-3 years it will have dings, look like shit and its not worth it

i am not advocating a 10 yr old worn out vehicle, but something nice dependable and if it it gets a dent you wont freak out

If you're responsible and can handle credit there is nothing wrong with using someone else's money for 60 months when the dealership offers 0% financing.

Cash, dont buy new.  Find a decent car or truck between $4000 to $8000

Only reason not to finance at today's rates (assuming you can get such rates) is the headache of shipping and insuring cars to and in other countries when you don't have clear title.

IMO/
Initial cost, maintenance costs, taxes, fuel mpg,  equate to  fees matter. your can delay gratification and get a 2050 BMW much more readily than today if things stay the same as the last 200 yrs. "Theres nothing new on wall street" should be googled/ best wishes

Related to your Civic comment...

The cost of a car is mch, much more than initial purchase price.

If you think the BMW is cool, will make you cool, or just drives so much cooler, whatever floats your boat, It's a free country. But don't kid yourself that it is almost a wash relative to a Civic in terms of costs. This might be the case of you lived in Germany, but you don't seem to.

A civic will retain larger portion of it's value, in fact I think Hondas are at or near the top of the heap and German luxury cars are at the bottom.  Smart money says to buy a sensible used car.  I can guarantee everyone driving new cars with their deployment money will one day look back and just wished they saved it.

This.  Peace of mind is priceless.