Quote:So, what is your stance on someone being able to afford to pay for a car outright, but the dealer is offering 0% financing for 60 months? Do you think it is financially irresponsible to do that even if you can afford it outright?

 

Yes it is.

 

First of all, look realistically rather than "wishful thinking".  No car dealer/bank/credit union is going to offer a loan for 60 months at 0% financing.  They might offer that at the beginning of a loan, but eventually they are going to charge interest.  That's how they make money.

 

Second of all, say you take a "0%" loan over 60 months.  We'll just say that your payment is $300.  Is it better to pay your $300 towards a car loan, or is it better to put that $300 in the bank in say a money market account that is earning say 1%?  Over 60 months that adds up.

 

Money in the bank, even if it's in a low interest rate earning account is better than paying the same amount where it virtually "disappears".

 

People constantly get sucked into the "no interest for 6 months" deal on credit cards as well as the "low interest rate" on new cars.  The "zero dollar down" mortgages are the worst.  We've become a consumer based society where it's far too "easy" to get supposedly "free" cash.

 

The bottom line is, if you can't put down at least 10% of the purchase price in cash for anything, you can't afford it and you don't need to be financing it.

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