popntx
Dryer sheet aficionado
I'm retired and will be in the market for a new car this year. I've always assumed that my next car purchase would be cash but am having second thoughts.
I have the resources readily available in after tax accounts to pay cash. Ally Bank savings accounts currently yield 2.2%, and a 3 year CD yields 2.65%. I also know that I'm pre-qualified at my current bank for a 3 year car loan at 2.75% (the longest I'd want to finance for). I haven't searched for rates elsewhere at this point but can possibly do better on either or both.
Anyway, back to my question about financing versus paying cash. I of course don't like making car payments, but I also don't like the thought of taking a big one-time chunk out of retirement savings.
Is it simply an "interest rate math question" of calculating earnings on savings versus the cost of financing? Or is it a little more complicated than that? How have those of you in similar situations made car purchasing decisions?
I have the resources readily available in after tax accounts to pay cash. Ally Bank savings accounts currently yield 2.2%, and a 3 year CD yields 2.65%. I also know that I'm pre-qualified at my current bank for a 3 year car loan at 2.75% (the longest I'd want to finance for). I haven't searched for rates elsewhere at this point but can possibly do better on either or both.
Anyway, back to my question about financing versus paying cash. I of course don't like making car payments, but I also don't like the thought of taking a big one-time chunk out of retirement savings.
Is it simply an "interest rate math question" of calculating earnings on savings versus the cost of financing? Or is it a little more complicated than that? How have those of you in similar situations made car purchasing decisions?