Get a loan or pay cash for purchase?

C_Mababejive

Lets say you were looking to buy something for a reasonable sum. Perhaps a used car or other major purchase?

Lets say the total cost was £8000,you have an excellent credit history.

Would you buy the car with cash or would you seek the very best loan..maybe 5.5% and what would be the rationale for your decision?

opinions4u

I'd borrow cheap to retain a contingency fund.

But if I wouldn't be paying interest if I had enough left over to retain a contingency fund after paying cash.

lippy1923

I'd do half and half. Pay half in cash and borrow the rest on a 0% cc so I could retain some emergency cash.

pvt

Pay cash, unless you can borrow for less than you get as an investment return.

gb12345

pvt wrote: »

Pay cash, unless you can borrow for less than you get as an investment return.

++1

Cash every time, unless I could get the borrowing on 0%. The interest on the loan is likely to far outweigh any interest earned by keeping the cash

eschaton

As most say, only finance if is less than your savings return.

If you don't have enough left over for your contingency fund - buy a cheaper car.

Ilona

Pay cash. Why give money away in interest when you don't need to.
Ilona

pc1271

My first choice would be 0% Credit card with cashback or points if possible. I certainly wouldn't want to take out a loan with interest if I had the cash, even if I could theoretically get a marginally better investment return.

C_Mababejive

Does anyone think effects of inflation has any bearing on the matter?

Voyager2002

C_Mababejive wrote: »

Does anyone think effects of inflation has any bearing on the matter?

Not really: inflation will erode the value of the amount you have borrowed, but will have an equal effect on the cash you are keeping.

dealer_wins

Pay cash, but pretend it is loan you have given yourself at 20%, and make repayments to yourself. You will be the winner instead of the loan company/bank.