4 ms·

Interest on savings accounts is far less than inflation, out side of an emergency fund there is little reason to save cash.

• imtringued 5y ago
  Isn't the benefit of the car loan that you can have emergency funds? I mean, if you save up $5k and get a car loan for $25k you for years you effectively have a 2 year emergency buffer. If you pay off the car up front you may run into liquidity issues until you have restored your emergency fund.
  • syshum 5y ago
    No one should consider using their emergency fund for anything other than emergency's, so I am not sure what your point it The comment I was responding too talked specifically about saving money in a savings account for the purposes of buying expensive things like a car. It should go with out saying one should not use their emergency fund for these purchases (unless they are an emergency) Once you have the 6mos to 1 year of expenses in your emergency fund you should divert any other cash to other accounts such as Debt Repayment (providing the debt is more than 5-7% interest or current inflation) and/or investments such as tax advantaged retirement accounts