Financing a Car vs Cash Purchase

[Derek Morrison]

I need to buy a car so I can drive for dollars (target market is too far from house to ride a bike). I've listened to all of the BP money podcasts, and one of the biggest mistakes people say is buying a car with financing. In other words, it's better to pay cash. However, you have to consider the opportunity cost of tying up such a large chunk of cash today, vs making small payments over time. For example, if I could finance a car with a 2% APR, is that "better" than paying a lump sum up front?

[Dennis M.]

Don’t fall into the middle class trap . Pay cash and buy something under 5k . A 20k new car will be worth 6k after 5 years . Did you get that ?? It loses 70% of its value by the time the loan is paid off ! Why get into a rush to lose money ? Don’t be dumb . Look if you spend your money like everybody else you will be broke like everybody else . Get a $ 3500 used Camry and go find some properties with high grass lol you don’t need a 30k shiny depreciating liability with 450$ a month car payment to find vacant houses in your town . Don’t you dare rationalize it by saying it’s a 2% Loan  when the real issue is the thing won’t be worth crap in 5-6 years and you probably could have actually made 50k on it had you just invested into real estate to begin with ! That’s not too financially intelligent .