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Why would you waste your liquidity on an asset so easy to secure a loan for as a car? A five year new car loan from a credit union -- no shopping around -- has
by saalweachter 11y ago
Why would you waste your liquidity on an asset so easy to secure a loan for as a car?
A five year new car loan from a credit union -- no shopping around -- has a cost of something like $58 / $1000 borrowed. So even if you have $20k cash on hand to buy a new car, for a thousand bucks you can maintain an extra $20k of liquidity for expenses that are more annoying or more expensive to finance, like auto repairs.
- deleted 11y ago[deleted]
- markvdb 11y agoBecause you want to buy a house? If you are borrowing 8k for a simple car @2%, 5 years, you are repaying ~140/month. On a 20 year loan @2%, that same monthly payment would net you 30k. My native country has a central database of every single loan outstanding. Lenders have to consult that before granting a loan and stay within certain limits. So at least here, an outstanding car loan might disqualify you from a home loan because of a lack of solvability...
- spdionis 11y agoIf in those 5 years you decide to buy a house can't you just pay the rest of the car debt with the liquidity you have saved up meanwhile?